4 Beacon Rd, Trafford Park,Stretford, Manchester M17 1AF

www.supreme.co.uk

Admission DocumentJanuary 2021

ELECTRONIC TRANSMISSION DISCLAIMER

IMPORTANT NOTICE: You must read the following disclaimer before continuing. The  followingnotice applies to the attached document, which has been made available to you in electronic form, andyou are therefore advised to read this notice carefully before reading, accessing or making any otheruse of  the attached document.  In accessing  the document,  you agree  to be bound by  the  followingterms and conditions, including any modifications to them from time to time, each time you receive anyinformation from us as a result of such access. You acknowledge that this electronic transmission andthe delivery of the attached document is confidential and intended only for you, and you agree you willnot  forward,  reproduce,  copy,  download  or  publish  this  electronic  transmission  or  the  attacheddocument (electronically or otherwise) to any other person. Failure to comply with this notice may resultin a violation of  the US Securities Act of 1933, as amended (the “Securities Act”) or  the applicablesecurities  laws  of  other  jurisdictions.  Except  as  provided  in  this  electronic  transmission,  neither  thedocument, nor any copy of it, may be taken, transmitted, distributed or released, directly or indirectly, inor  into  the United States of America, Australia, New Zealand, Canada, Japan or South Africa or anyother jurisdiction in which the taking, transmission, distribution or release may be unlawful (or to anyresident thereof).

IF YOU ARE NOT THE INTENDED RECIPIENT OF THIS ELECTRONIC TRANSMISSION AND THEATTACHED  DOCUMENT,  PLEASE  DO  NOT  DISTRIBUTE,  DISSEMINATE  OR  COPY  THEINFORMATION CONTAINED IN THIS ELECTRONIC TRANSMISSION AND THE DOCUMENT, BUTINSTEAD DELETE AND DESTROY ALL COPIES OF THIS ELECTRONIC TRANSMISSION AND THEDOCUMENT.

THIS  ELECTRONIC  TRANSMISSION  AND  THE  DOCUMENT  MAY  ONLY  BE  DISTRIBUTEDOUTSIDE  THE  UNITED  STATES  IN  “OFFSHORE  TRANSACTIONS”  AS  DEFINED  IN,  AND  INRELIANCE ON, REGULATION S UNDER THE SECURITIES ACT OR OTHERWISE PURSUANT TOAN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. ANYFORWARDING,  DISTRIBUTION  OR  REPRODUCTION  OF  THIS  ELECTRONIC  TRANSMISSIONAND THE DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITHTHIS NOTICE MAY RESULT  IN A  VIOLATION OF THE SECURITIES ACT OR THE APPLICABLELAWS OF OTHER JURISDICTIONS. NOTHING IN THIS ELECTRONIC TRANSMISSION AND THEDOCUMENT  CONSTITUTES  AN  OFFER  OF  SECURITIES  FOR  SALE  IN  ANY  JURISDICTIONWHERE IT IS UNLAWFUL TO DO SO.

THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTEREDUNDER THE SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANYSTATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD,PLEDGED  OR  OTHERWISE  TRANSFERRED  EXCEPT  IN  AN  OFFSHORE  TRANSACTIONPURSUANT TO REGULATION S UNDER THE SECURITIES ACT OR OTHERWISE PURSUANT TOAN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

This electronic transmission, the attached document and the offer referred to therein, when made, areonly  addressed  to  and  directed  at  persons  in  member  states  (“Member States”)  of  the  EuropeanEconomic  Area  (“EEA”)  who  are  “qualified investors”  within  the  meaning  of  Article  2(e)  of  theProspectus Regulation (EU) 2017/1129 (the “Prospectus Regulation”) (“Qualified Investors”). In theUnited Kingdom, this document is addressed to, and is directed only at, “qualified investors” within themeaning of Article 2(e) of  the Prospectus Regulation as  it  forms part of English  law by virtue of  theEuropean Union  (Withdrawal) Act 2018  (as amended) and  regulations made under  that Act:  (i) whohave  professional  experience  in  matters  relating  to  investments  falling  within  Article  19(5)  of  theFinancial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”)and Qualified  Investors  falling within Article  49(2)(a)  to  (d)  of  the Order;  and/or  (ii)  to whom  it mayotherwise  lawfully  be  communicated  (all  such  persons  together  being  referred  to  as  “relevantpersons”). This document must not be acted on or relied on: (i) in the United Kingdom, by persons whoare not relevant persons; and (ii) in any Member State of the EEA, by persons who are not QualifiedInvestors. Any  investment or  investment activity  to which  this document  relates  is  available only  to:(i) in the  United  Kingdom,  relevant  persons;  and  (ii)  in  any  Member  State  of  the  EEA,  QualifiedInvestors; and (iii) persons to whom an offer of Placing Shares may otherwise be lawfully made, andwill be engaged in only with such persons.

Nothing in this electronic transmission or the attached document constitutes an offer of securities forsale in the United States of America, its territories and possessions, any State of the United States orthe District of Columbia (together, the “United States”). The securities referred to herein have not beenand will not be registered under the Securities Act, or other securities laws of the United States, andmay not be offered, sold,  resold, delivered, distributed or otherwise  transferred, directly or  indirectly,except pursuant to a registration statement that has been declared effective under the Securities Act orin transactions exempt from, or not subject to, the registration requirements of the Securities Act or anyother applicable securities laws of the United States.

Confirmation of your representation. By accepting electronic delivery of the attached document, youare deemed to have represented to Grant Thornton UK LLP (“Grant Thornton”) and Joh. Berenberg,Gossler & Co. KG, London Branch (“Berenberg”) and Supreme plc (the “Company”) that (i) you are,or are acting on behalf of an institutional investor outside the United States (as defined in Regulation Sunder the Securities Act); (ii) if you are in the United Kingdom, you are a relevant person; (iii) if you arein any Member State of the EEA, you are a Qualified Investor; (iv) if you are outside the United Kingdomand the EEA (and the electronic mail addresses that you gave us and to which this document has beendelivered are for accounts not located in such jurisdictions), you are a person into whose possessionthis document may lawfully be delivered in accordance with the laws of the jurisdiction in which you arelocated;  (v) you acknowledge  that  this electronic  transmission and  the document  is confidential andintended  only  for  you  and  you will  not  transmit  the  document  (or  any  copy  of  it  or  part  thereof)  ordisclose, whether orally or in writing, any of its contents to any other person; and (vi) you acknowledgethat  you will make  your  own  assessment  regarding  any  legal,  taxation,  financial  or  other  economicconsiderations with respect to your decision to subscribe for or purchase any of the securities referredto herein.

The attached document has been made available  to you  in an electronic  form. You are  reminded  thatdocuments  transmitted  via  this  medium  may  be  altered  or  changed  during  the  process  of  electronictransmission and consequently none of  the Company, Grant Thornton and Berenberg, nor any of  theirrespective affiliates, directors, partners, officers, employees or agents, accepts any liability or responsibilitywhatsoever in respect of any difference between the document distributed to you in electronic format andany hard copy version. By accessing the attached document, you consent to receiving it in electronic form.A hard copy of the document will be made available to you only upon request.

Restriction. Nothing  in  this electronic  transmission or  the attached document constitutes, or may beused in connection with, an offer of securities for sale to persons other than the specified categories ofinstitutional investors described above and to whom they are directed, and access has been limited sothat  they  shall  not  constitute  a  general  solicitation.  If  you  have  gained  access  to  this  transmissioncontrary to the foregoing restrictions, you will be unable to subscribe for any of the securities describedherein.

Neither Grant Thornton or Berenberg, nor any of their respective affiliates, nor any of their respectivedirectors,  partners,  officers,  employees  or  agents,  accepts  any  responsibility  whatsoever  for  thecontents of  this document or  for any statement made or purported  to be made by  them, or on  theirbehalf,  in  connection  with  the  Company  or  the  offer.  Grant  Thornton,  Berenberg,  their  respectiveaffiliates and their respective directors, partners, officers, employees and agents accordingly disclaimall and any  liability, whether arising  in  tort, contract or otherwise which they might otherwise have  inrespect of such document or any such statement.

No representation or warranty, express or implied, is made by Grant Thornton, Berenberg, any of theirrespective affiliates or any of their respective directors, partners, officers, employees or agents as to theaccuracy, completeness,  reasonableness, verification or sufficiency of  the  information set out  in  thisdocument. Grant Thornton and Berenberg are acting exclusively for the Company, and, in the case ofBerenberg, the Selling Shareholders and no one else in connection with the Placing referred to herein.Grant Thornton  and Berenberg will  not  regard  any  other  person  (whether  or  not  a  recipient  of  thisdocument)  as  their  client  in  relation  to  the Placing  referred  to  herein  and will  not  be  responsible  toanyone other than the Company for providing the protections afforded to their clients or for giving advicein relation to the Placing or any transaction or arrangement referred to herein.

You are responsible for protecting against viruses and other destructive items. Your receipt of theattached document via electronic transmission is at your own risk and it  is your responsibility to takeprecautions to ensure that it is free from viruses and other items of a destructive nature.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or theaction you should take, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other

independent adviser who is authorised under FSMA if you are in the United Kingdom, or, if outside the United Kingdom, from another appropriately authorised

independent adviser.

This document, which comprises an AIM admission document drawn up in accordance with the AIM Rules for Companies, has been issued in connection with

an application for admission to trading on AIM of the entire share capital, issued and to be issued pursuant to the Placing, of Supreme plc. This document does

not constitute an offer or any part of any offer of transferable securities to the public within the meaning of section 102B of FSMA or otherwise. Accordingly,

this document does not constitute a prospectus  for  the purposes of section 85 of FSMA or otherwise and has not been drawn up  in accordance with  the

Prospectus Rules or filed with or approved by the FCA or any other competent authority.

Application has been made for the Shares to be admitted to trading on AIM (“Admission”). It is expected that Admission will become effective andthat trading in the Shares will commence on AIM at 8.00 a.m. on 1 February 2021.

AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or moreestablished companies. AIM securities are not admitted to the official list of the Financial Conduct Authority. A prospective investor should be awareof the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultationwith an independent financial adviser. Each AIM company is required pursuant to the AIM Rules for Companies to have a nominated adviser. Thenominated adviser is required to make a declaration to the London Stock Exchange on admission in the form set out in Schedule Two to the AIMRules for Nominated Advisers. The London Stock Exchange has not itself examined or approved the contents of this document.

The Company and  the Directors, whose names appear  on  page 9 of  this  document,  accept  responsibility  individually  and  collectively  for  the  information

contained in this document. To the best of the knowledge of the Company and the Directors (each of whom has taken all reasonable care to ensure that such

is the case), the information contained in this document is in accordance with the facts and contains no omission likely to affect the import of such information.

The whole of this document should be read. Your attention is drawn in particular to Part III of this document entitled “Risk Factors”, which describescertain risks associated with an investment in Supreme plc.

Supreme plc(incorporated and registered in England and Wales under the Companies Act 1985

with registered number 05844527)

Placing of 5,597,015 New Shares and 44,776,120 Sale Sharesat 134 pence per Share

andAdmission to trading on AIM

Sole Global Coordinator Nominated Adviser and Broker

The Selling Shareholders are offering 44,776,120 Sale Shares in aggregate for sale under the Placing and the Company is offering to issue up to 5,597,015

New Shares pursuant to the Placing. All of the Shares, including the New Shares and the Sale Shares, will, on Admission, rank equally in all respects, including

the right to receive all dividends or other distributions declared, made or paid on the Shares after Admission.

Grant  Thornton,  which  is  authorised  and  regulated  in  the  United  Kingdom  by  the  Financial  Conduct Authority,  is  acting  exclusively  for  the  Company  as

nominated adviser  in connection with  the Placing and Admission, and will not be responsible  to any other person  for providing  the protections afforded  to

customers of Grant Thornton or advising any other person in connection with the Placing and Admission. Grant Thornton’s responsibilities as the Company’s

nominated adviser under the AIM Rules for Companies and the AIM Rules for Nominated Advisers will be owed solely to London Stock Exchange and not to

the Company, the Directors or to any other person in respect of such person’s decision to subscribe for or acquire the Sale Shares or New Shares in reliance

on any part of this document. Apart from the responsibilities and liabilities, if any, which may be imposed on Grant Thornton by FSMA or the regulatory regime

established under  it, Grant Thornton does not accept any  responsibility whatsoever  for  the contents of  this document, and no  representation or warranty,

express or implied, is made by Grant Thornton with respect to the accuracy or completeness of this document or any part of it.

Berenberg, a firm which is authorised by the German Federal Financial Supervisory Authority and subject to limited regulation in the United Kingdom by the

Financial Conduct Authority, is acting exclusively for the Company and the Selling Shareholders as sole global coordinator and broker in connection with the

Placing and Admission, and will not be responsible to any other person for providing the protections afforded to customers of Berenberg or advising any other

person in connection with the Placing and/or Admission. Apart from the responsibilities and liabilities, if any, which may be imposed on Berenberg by FSMA or

the regulatory regime established under it, Berenberg does not accept any responsibility whatsoever for the contents of this document, and no representation

or warranty, express or implied, is made by Berenberg with respect to the accuracy or completeness of this document or any part of it.

This document does not constitute an offer  to sell, or  the solicitation of an offer  to buy or subscribe for, securities  in any  jurisdiction  in which such offer or

solicitation is unlawful and, in particular, is not for publication or distribution in or into the United States, Canada, Australia, New Zealand, South Africa or Japan,

nor in any country or territory where to do so may contravene local securities laws or regulations. The distribution of this document in other jurisdictions may

be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any such restriction. Any

failure to comply with these restrictions may constitute a violation of the securities law of any such jurisdictions. The Shares have not been and will not be

registered under the US Securities Act 1933, as amended nor under the applicable securities laws of any State of the United States or any province or territory

of Canada, Australia, New Zealand, South Africa or Japan. Accordingly, the Shares may not be offered or sold directly or indirectly in or into the United States,

Canada, Australia, New Zealand, South Africa, Japan or to any resident of the United States, Canada, Australia, New Zealand, South Africa or Japan. No public

offering of securities is being made in the United States. The Shares have not been approved or disapproved by the US Securities and Exchange Commission,

any state securities commission or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the

accuracy or adequacy of this document. Any representation to the contrary is a criminal offence in the United States.

Holding Shares may have  implications  for overseas shareholders under  the  laws of  the  relevant overseas  jurisdictions. Overseas  investors should  inform

themselves  about  and  observe  any  applicable  legal  requirements.  It  is  the  responsibility  of  each  overseas  shareholder  to  satisfy  himself  as  to  the  full

observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents

which may be required, or the compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other

taxes due in such jurisdiction.

Copies of  the document will be available free of charge during normal business hours on any day (except Saturdays, Sundays and public holidays) at  the

registered  offices  of  the  Company for  one  month  from  the  date  of  this  document.  This  document  is  also  available  on  the  Company’s  website,

www.Supreme.co.uk.

IMPORTANT INFORMATION

General

This document should be read in its entirety before making any decision to subscribe for or purchasePlacing Shares. Prospective investors should rely only on the information contained in this document.No person has been authorised  to give any  information or make any  representations other  than ascontained in this document and, if given or made, such information or representations must not be reliedon as having been authorised by the Company, Grant Thornton or Berenberg or any of their respectiveaffiliates,  officers,  directors,  partners,  employees  or  agents.  Without  prejudice  to  the  Company’sobligations  under  the  AIM  Rules  for  Companies,  neither  the  delivery  of  this  document  nor  anysubscription  or  purchase  made  under  this  document  shall,  under  any  circumstances,  create  anyimplication that there has been no change in the affairs of the Company or the Group since the date ofthis document or that the information contained herein is correct as at any time subsequent to its date.

Prospective investors in the Company must not treat the contents of this document or any subsequentcommunications from the Company, Grant Thornton or Berenberg or any of their respective affiliates,officers,  directors,  partners,  employees  or  agents  as  advice  relating  to  legal,  taxation,  accounting,regulatory, investment or any other matters.

If you are in any doubt about the contents of this document or the action you should take, you shouldimmediately seek your own personal  financial advice from your stockbroker, bank manager, solicitor,accountant or other  independent adviser who  is authorised under  the FSMA if you are  in  the UnitedKingdom, or, if you are outside the United Kingdom, from another appropriately authorised independentadviser.

The Company does not accept any responsibility for the accuracy or completeness of any informationreported by the press or other media, nor  the fairness or appropriateness of any forecasts, views oropinions  expressed  by  the  press  or  other  media  or  any  other  person  regarding  the  Placing,  theCompany and/or  its subsidiaries. The Company makes no representation as to  the appropriateness,accuracy, completeness or reliability of any such information or publication.

As required by the AIM Rules for Companies, the Company will update the information provided in thisdocument by means of a supplement to it if a significant new factor that may affect the evaluation of thePlacing by prospective investors occurs prior to Admission or if it is noted that this document containsany mistake or substantial inaccuracy. This document and any supplement thereto will be made publicin accordance with the AIM Rules for Companies.

This document is not intended to provide the basis of any credit or other evaluation and should not beconsidered as a recommendation, by the Company, the Directors, Grant Thornton, Berenberg or any oftheir respective representatives, that any recipient of this document should subscribe for or purchaseany of the Shares. Prior to making any decision as to whether to subscribe for or purchase any Shares,prospective investors should read the entirety of this document and, in particular, the section headed“Risk Factors”.

Investors should ensure that they read the whole of this document and not just rely on key informationor information summarised within it. In making an investment decision, prospective investors must relyupon their own examination (or an examination by the prospective investor’s FSMA authorised or otherappropriate advisers) of the Company and the terms of this document, including the risks involved. Anydecision to purchase Shares should be based solely on this document and the prospective investor’sown (or such prospective investor’s FSMA authorised or other appropriate advisers’) examination of theCompany.

Investors  who  subscribe  for  or  purchase  Placing  Shares  in  the  Placing  will  be  deemed  to  haveacknowledged that: (i) they have not relied on Grant Thornton, Berenberg or any person affiliated witheither of them in connection with any investigation of the accuracy of any information contained in thisdocument for their  investment decision; (ii)  they have relied only on the information contained in thisdocument;  and  (iii)  no  person  has  been  authorised  to  give  any  information  or  to  make  anyrepresentation concerning the Company or the Shares (other than as contained in this document) and,if given or made, any such other information or representation has not been relied upon as having beenauthorised by or on behalf of the Company, the Directors, Grant Thornton or Berenberg.

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None  of  the  Company,  the  Directors,  Grant  Thornton,  Berenberg  or  any  of  their  respectiverepresentatives makes any representation to any subscriber or purchaser of Placing Shares regardingthe legality of an investment by such subscriber or purchaser.

In connection with the Placing, Grant Thornton, Berenberg and any of their respective affiliates, actingas investors for their own accounts, may acquire Shares, and in that capacity may retain, purchase, sell,offer to sell or otherwise deal for their own accounts in such Shares and other securities of the Companyor  related  investments  in  connection  with  the  Placing  or  otherwise. Accordingly,  references  in  thisdocument to the Shares being offered, subscribed, purchased, acquired, placed or otherwise dealt withshould be read as including any offer to, or subscription, purchase, acquisition, dealing or placing by,Grant  Thornton,  Berenberg  or  any  of  their  respective  affiliates  acting  as  investors  for  their  ownaccounts. Neither Grant Thornton nor Berenberg intend to disclose the extent of any such investmentor transactions otherwise than in accordance with any legal or regulatory obligation to do so.

Grant Thornton, Berenberg and any of their respective affiliates may have engaged in transactions with,and  provided  various  investment  banking,  financial  advisory  or  other  services  to,  the Company,  forwhich they would have received customary fees. Grant Thornton, Berenberg and any of their respectiveaffiliates may provide such services to the Company and any of its affiliates in the future.

Notice to prospective investors in the United Kingdom

This document is being distributed in the United Kingdom where it is directed only at persons who are“qualified investors” within the meaning of Article 2(e) of the Prospectus Regulation as it forms part ofEnglish law by virtue of the European Union (Withdrawal) Act 2018 (as amended) and regulations madeunder  that  Act, and  who  are  (i)  persons  having  professional  experience  in  matters  relating  toinvestments, i.e., investment professionals within the meaning of Article 19(5) of the Financial Servicesand Markets Act 2000 (Financial Promotion) Order 2005 (the “FPO”); or (ii) high net-worth companies,unincorporated  associations  and  other  bodies  within  the  meaning  of Article  49  of  the  FPO  and  atpersons  to  whom  it  is  otherwise  lawful  to  distribute  it  without  any  obligation  to  issue  a  prospectusapproved by competent regulators. The investment or investment activity to which this document relatesis available only  to such persons.  It  is not  intended  that  this document be distributed or passed on,directly or indirectly, to any other class of person and in any event, and under no circumstances, shouldpersons of any other description rely on or act upon the contents of this document.

Notice to prospective investors in the European Economic Area

In relation to each Member State of the European Economic Area (“EEA”) (each a “Member State”),no Shares have been offered or will be offered pursuant  to  the Placing to  the public  in  that MemberState prior to the publication of a prospectus in relation to the Shares which has been approved by thecompetent authority in that Member State, or otherwise in accordance with the Prospectus Regulation,except  that offers of Shares  to  the public may be made at any  time under  the  following exemptionsunder the Prospectus Regulation:

(1)      to any legal entity which is a qualified investor as defined in the Prospectus Regulation;

(2)      to  fewer  than  150  natural  or  legal  persons  (other  than  qualified  investors  as  defined  in  theProspectus Regulation) in such Member State; or

(3)      in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided  that  no  such  offer  of  Shares  shall  require  the Company  or  any  other  person  to  publish  aprospectus pursuant to Article 21 of the Prospectus Regulation or supplement a prospectus pursuantto Article  23 of  the Prospectus Regulation and each person who  initially  acquires any Shares or  towhom any offer  is made under  the Placing will be deemed  to have  represented, acknowledged andagreed that it is a qualified investor within the meaning of the Prospectus Regulation.

Neither the Company, Grant Thornton nor Berenberg has authorised, nor does any of them authorise,the making of any offer of Shares in circumstances in which an obligation arises for the Company topublish a prospectus or a supplemental prospectus in respect of such offer.

For the purposes of  this provision,  the expression “an offer to the public”  in relation to any offer ofShares  in  any  Member  State  means  a  communication  in  any  form  and  by  any  means  presenting

3

sufficient information on the terms of the offer and any Shares to be offered so as to enable an investorto  decide  to  purchase  or  subscribe  for  the  Shares,  and  the  expression  “Prospectus Regulation”means Regulation 2017/1129/EU.

Forward looking statements

Certain  statements  in  this  document  are  or  may  constitute  forward  looking  statements,  includingstatements about current beliefs and expectations of the Directors. In particular, the words “envisage”,“projects”,  “expect”,  “anticipate”,  “estimate”,  “may”,  “should”,  “plan”,  “intend”,  “will”,  “would”,  “could”,“target”,  “believe”  and  similar  expressions  (or  in  each  case  their  negative  and  other  variations  orcomparable  terminology)  can  be  used  to  identify  forward  looking  statements.  Such  forward  lookingstatements relate to matters that are not historical facts. They appear in a number of places throughoutthis document and  include statements regarding the Board’s expectations of external conditions andevents, current business strategy, plans and the other objectives of management for future operationsand estimates and projections of the Group’s financial performance. Though the Board believes theseexpectations to be reasonable at the date of this document, they may prove to be erroneous. Forwardlooking statements involve known and unknown risks, uncertainties and other factors which may causethe  actual  results,  achievements  or  performance  of  the  Group,  or  the  industry  in  which  the  Groupoperates, to be materially different from any future results, achievements or performance expressed orimplied by such forward looking statements. Prospective investors are strongly recommended to readthe risk factors set out in Part III of this document.

Any forward looking statement in this document speaks only as of the date it is made. Save as requiredby law or regulation or the AIM Rules for Companies, the Company undertakes no obligation to publiclyrelease the results of any revisions to any forward looking statements in this document that may occurdue to any change in the Board’s expectations or in order to reflect events or circumstances after thedate of this document.

Any forward looking statement in this document based on past or current trends and/or activities of theGroup should not be taken as a representation or assurance that such trends or activities will continuein  the  future. No  statement  in  this  document  is  intended  to  be  a  profit  forecast  or  to  imply  that  theearnings of the Group for the current year or future years will match or exceed the historical or publishedearnings of the Group.

Presentation of financial information

The consolidated historical financial information of the Group for the nine months ended 31 March 2019and the year ended 31 March 2020 in Part IV of this document, the historical financial information ofSupreme Imports  for  the two years ended 31 March 2019  in Part V of  this document and unauditedinterim financial information of the Group in Part VI of this document has been prepared in accordancewith  IFRS  save  for  the  requirement  of  IFRS  3  that  a  balance  sheet  as  at  the  date  of  transition  ispresented and this is therefore a departure from the requirements of IFRS.

The Group and Supreme Imports have historically reported under UK Generally Accepted AccountingPractice (“UK GAAP”). An explanation of the changes to the Group’s financial information on transitionfrom UK GAAP is presented in note 32 of Section B of Part IV of this document. An explanation of thechanges to Supreme Import’s financial information on transition from UK GAAP is presented in note 30of Section B of Part V of this document.

Non-IFRS and non-financial information operating data

Unless stated otherwise, all trading information included in this document not extracted from Supreme’shistorical financial information is extracted without material adjustment from the unaudited managementaccounts  or  internal  financial  reporting  systems  supporting  the  preparation  of Supreme’s  historicalfinancial  information  for  the  relevant  periods.  These  management  accounts  and  internal  financialreporting  systems  are  prepared  in  accordance  with  the  principles  of  UK  GAAP,  using  informationderived from accounting records used in the preparation of Supreme’s historical financial information.

Certain non-IFRS measures such as EBITDA and Adjusted EBITDA have been included in the financialinformation contained in this document as the Directors believe that these present important alternativemeasures with which to assess Supreme’s performance. These measures should not be considered as

4

an  alternative  to  revenue  and  operating  profit,  which  are  IFRS measures,  or  to  other measures  ofperformance under IFRS. In addition, the Company’s calculation of EBITDA and Adjusted EBITDA maybe different from the calculation used by other companies and therefore comparability may be limited.

Rounding

The  financial  information  and  certain  other  figures  in  this  document  have  been  subject  to  roundingadjustments. Therefore, the sum of numbers in a table (or otherwise) may not conform exactly to thetotal  figure  given  for  that  table.  In  addition,  certain  percentages  presented  in  this  document  reflectcalculations based on  the underlying  information prior  to  rounding and accordingly may not conformexactly to the percentages that would be derived if the relevant calculations were based on the roundednumbers.

Currency presentation

In the document, references to “sterling”, “£”, “penny”, “pence” and “p” are to the lawful currency of theUnited Kingdom,  references  to  “€” and  “euros” are  to  the  lawful  currency of  certain of  the countrieswithin the EU and references to “$” are references to the lawful currency of the United States. Unlessotherwise  indicated,  the  financial  information  contained  in  this  document  has  been  expressed  insterling. The Group presents its financial statements in sterling.

Market, industry and economic data

The data, statistics and  information and other statements  in  this document  regarding  the markets  inwhich the Group operates, or the Group’s position therein, are based on the Group’s records. In relationto these sources, such information has been accurately reproduced from the published information and,so  far  as  the  Directors  are  aware  and  are  able  to  ascertain  from  the  information  provided  by  thesuppliers of these sources, no facts have been omitted which would render such information inaccurateor misleading.

This document includes market share and industry data and forecasts that the Company has obtainedfrom  industry  publications,  surveys  and  internal  company  sources. As  noted  in  this  document,  theCompany has obtained market and  industry data  relating  to  the Group’s business  from providers ofindustry data and has obtained market data from the following reports:

Action on Smoking and Health (ASH). Fact Sheet: Use of e-cigarettes (vapes) among adults in GreatBritain. October 2020

Euromonitor Passport historical data and projections for Incandescent Lamps, Halogen Lamps, LinearFluorescent Lamps, Compact Fluorescent Lamps and Light-Emitting Diode Lamps for the UK

Euromonitor Passport historical data and projections  for Light-Emitting Diode Lamps  for Europe andthe UK

Euromonitor Passport historical data and projections for E-Vapour Products for Europe and the UK

Euromonitor Passport historical data and projections for E-Vapour Products for the UK

Euromonitor Passport historical data and projections for Sports Nutrition and Healthcare for the UK

Euromonitor Passport  historical  data  and projections  for Beauty  and Personal Care  for Europe andthe UK

Euromonitor Passport historical data and projections for Home Care for Europe and the UK

Mordor Intelligence industry report on Europe consumer battery report

Statista Battery and accumulator market in the United Kingdom

Market and  industry data  is  inherently predictive and speculative, and  is not necessarily reflective ofactual market conditions. Statistics in such data are based on market research, which itself is based onsampling and subjective judgments by both the researchers and the respondents, including judgmentsabout what types of products and transactions should be included in the relevant market. The value ofcomparisons of statistics for different markets is limited by many factors, including: (i) the markets are

5

defined differently; (ii) the underlying information was gathered by different methods; and (iii) differentassumptions were  applied  in  compiling  the  data.  Consequently,  the  industry  publications  and  otherreports referred to above generally state that the information contained therein has been obtained fromsources  believed  to  be  reliable,  but  that  the  accuracy  and  completeness  of  such  information  is  notguaranteed and,  in some  instances,  these  reports and publications state expressly  that  they do notassume liability for such information. Specifically, neither Grant Thornton nor Berenberg has authorisedthe contents of, or any part of,  this document and accordingly no  liability whatsoever  is accepted byGrant Thornton or Berenberg for the accuracy or completeness of any market or industry data which isincluded in this document.

No incorporation of website information

The  contents  of  the  Company’s  website,  any  website  mentioned  in  this  document  or  any  websitedirectly  or  indirectly  linked  to  these  websites  have  not  been  verified  and  do  not  form  part  of  thisdocument and prospective investors should not rely on such information.

Interpretation

Certain  terms used  in  this document are defined and certain  technical and other  terms used  in  thisdocument are explained at the section of this document under the heading “Definitions and Glossary”.

All times referred to in this document are, unless otherwise stated, references to London time.

All  references  to  legislation  in  this document are  to  the  legislation of England and Wales unless  thecontrary is indicated. Any reference to any provision of any legislation or regulation shall  include anyamendment, modification, re-enactment or extension thereof.

Words importing the singular shall include the plural and vice versa and words importing the masculinegender shall include the feminine or neutral gender.

Notice to Distributors

Solely  for  the  purposes  of  the  product  governance  requirements  contained within:  (a)  EU Directive2014/65/EU  on markets  in  financial  instruments,  as  amended  (“MiFID II”);  (b) Articles  9  and  10  ofCommission Delegated Directive  (EU) 2017/593 supplementing MiFID  II; and  (c)  local  implementingmeasures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and anyliability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of theMiFID II Product Governance Requirements) may otherwise have with respect thereto, the Shares havebeen subject to a product approval process, which has determined that the Shares are: (i) compatiblewith an end target market of retail investors and investors who meet the criteria of professional clientsand  eligible  counterparties,  each  as  defined  in  MiFID  II;  and  (ii)  eligible  for  distribution  through  alldistribution channels as are permitted by MiFID II (the “Target Market Assessment”).

Notwithstanding the Target Market Assessment, distributors should note that: the price of the Sharesmay decline and  investors could  lose all or part of  their  investment;  the Shares offer no guaranteedincome and no capital protection; and an investment in the Shares is compatible only with investors whodo not  need a guaranteed  income or  capital  protection, who  (either alone or  in  conjunction with anappropriate  financial  or  other  adviser)  are  capable  of  evaluating  the  merits  and  risks  of  such  aninvestment and who have sufficient resources to be able to bear any losses that may result therefrom.The Target Market Assessment  is without  prejudice  to  the  requirements of  any  contractual,  legal  orregulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding theTarget Market Assessment, Berenberg will only procure investors who meet the criteria of professionalclients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment ofsuitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor orgroup of  investors to invest  in, or purchase, or take any other action whatsoever with respect to, theShares.

Each  distributor  is  responsible  for  undertaking  its  own  target  market  assessment  in  respect  of  theShares and determining appropriate distribution channels.

6

CONTENTS

Page

PLACING STATISTICS AND EXPECTED TIMETABLE 8

COMPANY OFFICERS, REGISTERED OFFICE AND ADVISERS 9

DEFINITIONS 10

PART I INFORMATION ON THE GROUP 14

PART II REGULATORY ENVIRONMENT FOR E-CIGARETTES 33

PART III RISK FACTORS 40

PART IV HISTORICAL FINANCIAL INFORMATION RELATING TO THE GROUP 55

PART V HISTORICAL FINANCIAL INFORMATION RELATING TO SUPREME IMPORTS 94

PART VI UNAUDITED INTERIM FINANCIAL INFORMATION OF THE GROUP 131

PART VII UNAUDITED PRO FORMA STATEMENT OF NET ASSETS OF THE GROUP 142

PART VIII TERMS AND CONDITIONS OF THE PLACING 144

PART IX ADDITIONAL INFORMATION 151

7

PLACING STATISTICS AND EXPECTED TIMETABLE

Placing Statistics

Placing Price per Sale Share 134 pence

Number of Existing Shares 110,005,000

Number of New Shares to be issued by the Company  5,597,015

Number of Employee Shares to be issued by the Company 897,965

Number of Sale Shares in the Placing (excluding the Employee Shares) 43,878,155(together the Placing Shares)

Placing Shares as a percentage of the aggregate of Enlarged Share Capital 37.66 per cent.

Number of Shares in issue following the Placing and Admission 116,499,980

Market capitalisation of the Company at the Placing Price following Admission(1) £156.1 million 

Number of Shares in respect of which Options are outstanding on Admission 1,683,365

Fully diluted number of Shares immediately following Admission(2) 118,371,049

Gross proceeds of the Placing receivable by the Company £7.5 million

Estimated net proceeds of the Placing receivable by the Company(3) £5.6 million

TIDM SUP

ISIN GB00BDT89C08

SEDOL BDT89C0

Legal Entity Identifier (“LEI”)  213800DBHCI5WQWECL16

Notes:

(1)   The market capitalisation of the Company at any given time will depend on the market price of the Shares at that time. There

can be no assurance that the market price of a Share will equal or exceed the Placing Price.

(2)   Assuming all Options were capable of exercise, and had been exercised, as at Admission.

(3)   After deduction of estimated commissions, fees and expenses payable by the Company of approximately £1.9 million.

Expected Timetable

Publication of this document 27 January 2021

Admission and commencement of dealings in the Shares on AIM 8.00 a.m. on 1 February 2021 

Placing Shares credited to CREST accounts (where applicable) 8.00 a.m. on 1 February 2021 

Despatch of definitive share certificates (where applicable) by 15 February 2021

All times are London, UK time. Each of the times and dates in the above timetable is indicative only andis subject to change without further notice.

8

COMPANY OFFICERS, REGISTERED OFFICE AND ADVISERS

Directors Paul Andrew McDonald, Non-executive Chairman Sandeep (Sandy) Singh Chadha, Chief Executive Officer Suzanne Gwendoline Smith, Chief Financial OfficerMark Richard Cashmore, Independent Non-executive DirectorSimon Martin Lord, Independent Non-executive Director

Company secretary Suzanne Smith

Registered office 4 Beacon RoadTrafford ParkManchester M17 1AF

Telephone Number 0161 872 5151

Website www.Supreme.co.uk

Nominated Adviser Grant Thornton UK LLP30 Finsbury SquareLondon EC2A 1AG

Joh. Berenberg, Gossler & Co. KG, London Branch60 Threadneedle StreetLondon EC2R 8HP

Legal advisers to the Company Beyond Corporate Limited2nd FloorCommercial Wharf6 Commercial StreetManchester M15 4PZ

Bird & Bird LLP12 New Fetter Lane London EC4A 1JP

BDO LLP3 Hardman Street SpinningfieldsManchester M3 3AT

IFRS accounting advisers Bennett BrooksSt George’s CourtWinnington AvenueNorthwich CW8 4EE

Registrars Equiniti LimitedAspect HouseSpencer RoadLancing BN99 6DA 

PR advisers to the Company Vigo CommunicationsSackville House40 PiccadillyMayfairLondon W1J 0DR

Sole Global Coordinatorand Broker

Legal advisers to the NominatedAdviser and the Sole GlobalCoordinator and Broker

Auditors and ReportingAccountant

9

DEFINITIONS

Adjusted EBITDA earnings before profits from transactions in non-hedging foreignexchange  derivative  contracts,  exceptional  items,  interest,taxation, depreciation, and amortisation

Admission the admission of the Shares, issued and to be issued pursuantto  the  Placing,  to  trading  on  AIM  becoming  effective  inaccordance with Rule 6 of the AIM Rules for Companies

AIM the AIM market of London Stock Exchange

AIM Rules for Companies the  AIM  Rules  for  Companies  published  by  London  StockExchange  from  time  to  time  (including,  without  limitation,  anyguidance notes or statements of practice) and those other rulesof  London  Stock  Exchange  which  govern  the  admission  ofsecurities to trading on, and the regulation of AIM

AIM Rules for Nominated Advisers the  AIM  Rules  for  Nominated  Advisers  published  by  LondonStock Exchange from time to time

Berenberg Joh. Berenberg, Gossler & Co. KG, London Branch, broker  tothe Company and sole global coordinator

Board the board of Directors of the Company

B&M B&M European Value Retail S.A.

CAGR compounded annual growth rate

Companies Act the Companies Act 2006 (as amended)

Company Supreme plc (incorporated and registered in England and Walesunder the Companies Act with registered number 05844527)

COVID-19 the coronavirus disease 2019

CREST the computerised settlement system to  facilitate  the  transfer oftitle of shares in uncertificated form, operated by Euroclear

CREST Regulations the Uncertificated Securities Regulations  2001  (SI  2001/3755)(as amended)

Directors the directors of  the Company as at  the date of  this document,whose names appear on page 9 of this document

EBITDA earnings before interest, tax, depreciation and amortisation

EEA the European Economic Area

EMI Scheme the Supreme plc  Enterprise  Management  Incentive  Scheme2018 further details of which are set out in paragraph 5(a) of PartIX of this document

Employee Shares the 897,965 Shares to be issued to Supreme Nominees Limitedand to be sold pursuant to the Placing on behalf of employeesholding Options as described in paragraph 3(g) of Part IX of thisdocument

Enlarged Share Capital the issued share capital of  the Company immediately followingAdmission comprising the Existing Shares, the New Shares andthe Employee Shares

ESG Environmental Social and Governance

10

Euroclear Euroclear UK & Ireland Limited, the operator of CREST

Euromonitor Euromonitor International, a market research provider

Executive Directors the  executive Directors  of  the Company as  at  the date  of  thisdocument,  namely  Sandeep  Singh  Chadha  and  SuzanneGwendoline Smith

Existing Shares the 110,005,000 Shares in issue at the date of this document

FCA or Financial Conduct Authority the Financial Conduct Authority of the United Kingdom

FSMA the Financial Services and Markets Act 2000, as amended

GMP Good Manufacturing Practice

Grant Thornton Grant Thornton UK LLP, nominated adviser to the Company

Group the Company and  its  subsidiaries and subsidiary undertakings(in each case as defined in the Companies Act)

Historical Financial Information the  audited  financial  information  of  the  Company  for  the ninemonths  ended  31 March  2019  and  the  year  ended  31 March2020 (as set out in Section B of Part IV of this document) and theaudited  financial  information  of Supreme Imports  for  thetwo years  ended  31  March  2019  (as  set  out  in  Section  B  ofPart V of this document)

HMRC Her Majesty’s Revenue and Customs

IFRS International Financial Reporting Standards as endorsed by theEuropean Union

ITEPA 2003 the Income Tax (Earnings and Pensions) Act 2003

LED light emitting diode

London Stock Exchange London Stock Exchange plc

Member State a member state of the EEA

MHRA the  Medicines  and  Healthcare  products  Regulatory  Agencywhich is an executive agency of the Department of Health in theUnited Kingdom

New Shares the 5,597,015 new  Shares  to  be  issued  by  the  Company toplacees pursuant to the Placing

Non-Executive Directors the  non-executive  Directors  of  the  Company  (including  theChairman)  as  at  the  date  of  this  document,  namely  PaulMcDonald, Mark Cashmore, and Simon Lord

OEM original equipment manufacturer

Options rights to acquire Shares as described in paragraph 5 of Part IXof this document

Placing the conditional placing of the Placing Shares at the Placing Pricepursuant to the Placing Agreement

Placing Agreement the conditional agreement entered  into on or about  the date ofthis document between the Company, the Directors, the SellingShareholders, Berenberg and Grant Thornton, in relation to thePlacing of the Sale Shares and the New Shares and Admission,details  of  which  are  set  out  in  paragraph 9 of  Part  IX  of  thisdocument

11

Placing Price 134 pence per Sale Share

Placing Shares the New Shares and the Sale Shares

Primary Selling Shareholder Sandeep (“Sandy”) Singh Chadha

Prospectus Regulation Prospectus Regulation (EU) 2017/1129

Prospectus Regulation Rules the prospectus regulation rules made by the FCA under Part VIof FSMA, as amended

Provider Distribution Provider Distribution Limited,  a  company acquired  in February2020

QCA Quoted Companies Alliance

QCA Code the  Corporate  Governance  Code  published  by  the  QCA  andupdated from time to time

Sale Shares the 44,776,120 Shares  to be sold by  the Selling Shareholderspursuant to the Placing

Selling Shareholders the  Primary  Selling  Shareholder,  Sandy  Chadha  and  AditiChadha as trustees of the Chadha Discretionary Trust 2020 andSupreme Nominees Limited (selling Employee Shares on behalfof a  number  of  employees  holding Options, further  details  ofwhich are set out in paragraph 3(g) of Part IX of this document)

Senior Managers Andrew  Beaumont,  Dan  Clark,  Michael  Holliday,  and  DavidNeilson

Shareholders holders of Shares for the time being

Shares ordinary shares of 10 pence each in the capital of the Company

SI Holdings SI Holdings (Jersey) Limited, a company incorporated in Jersey(registered number 121655) and having  its  registered office at11 Bath Street, St Helier, Jersey JE2 4ST Channel Islands whichis a wholly owned subsidiary of the Company

SKU stock keeping unit

Supreme as the context shall so admit means the Company and/or all orsome of the members of its Group or (insofar as it relates to anyperiod prior to 24 August 2007) to Supreme Imports (Wholesale)Limited  (incorporated  and  registered  in  England  and  Walesunder the Companies Acts 1948 to 1967 with registered number01216520) and/or any of their respective businesses from timeto time

Supreme Imports Supreme Imports  Limited  (incorporated  and  registered  inEngland  and  Wales  under  the  Companies  Act  2006  withregistered number 05292196), a subsidiary of the Company

Symbol Group Retailer an independent retailer that is a member of a larger organisationknown  as  a  symbol  group.  The  symbol  group  retailer  sectorcomprises  all  independent  and  multiple  retailers  who  areaffiliated to a symbol, fascia or franchise group

Takeover Code the  City  Code  on  Takeovers  and  Mergers  published  by  theTakeover Panel, as amended

Takeover Panel the UK Panel on Takeovers and Mergers

12

TPD the European Union’s Tobacco Products Directive (2014/40/EU)implemented  in  the  UK  through  the  Tobacco  and  RelatedProducts Regulations 2016

Shares recorded on the register of members of the Company asbeing held in uncertificated form in CREST and title to which, byvirtue of the CREST Regulations, may be transferred by meansof an instruction issued in accordance with the rules of CREST

£ and p United Kingdom pounds Sterling and pence, respectively

uncertificated or in uncertificatedform

13

PART I

INFORMATION ON THE GROUP

1. Introduction

Supreme is  a  leading  manufacturer,  supplier  and  brand  owner  of  fast  moving  consumable  goods.

Through  its  vertically  integrated  platform  spanning  from  product  development  and  manufacturing

capabilities to an extensive retail distribution network Supreme offers a route to market for well-known

global  brands.  Today, Supreme supplies  products  across  five  product  categories,  namely  batteries

(through distribution agreements and arrangements),  lighting (through  licensing agreements), vaping

(predominantly  own  brand),  sports  nutrition  &  wellness  (through  own  brands  and contract

manufacturing agreements)  and  branded  household  consumer  goods  (through  distribution

arrangements).

Supreme has  long-established  relationships  with  well-known  global  brands, including Duracell,

Panasonic,  Energizer  and  JCB.  The  Group  has  obtained  international  distribution  and  licensing

agreements to develop and expand battery and/or lighting categories for these world-wide recognised

brands and has successfully developed sales through its diverse distribution network. Since 2010, the

Group has sold over £450 million’s worth of battery and lighting products and has created strong sales

and marketing relationships with its retail customers, which have approximately over 10,000 branded

retail outlets as well as thousands of independent stores. In the financial year ended 31 March 2020

Supreme sold  approximately  200  million  batteries  and  approximately  23  million  individual  lighting

products.

Supreme has  a  history  of  product  and  brand  development  which  has  driven  the  expansion  of  its

portfolio. The business has grown its offering from branded distribution, through licences with minimum

purchases to in-house manufacturing for its own brands and for third parties.

Since  2013,  the Group has  developed and,  from 2016,  has manufactured  a  broad  range of  vaping

products,  predominantly  under  the 88Vape brand.  Leveraging  the Group’s  long-standing distribution

and retail relationships, the Directors believe Supreme has become the largest producer of e-liquids by

volume in the UK with an estimated market share of approximately 30 per cent. of bottles sold. In 2018,

the Group added a sports nutrition and wellness range of products including sports nutrition powders

and wellness supplements which it manufactures in house or using third-party contract manufacturers;

and in 2020 the branded household consumer goods category was added to its portfolio.

Since September 2019 the Group has manufactured an average of over 250,000 bottles of e-liquid per

working  day  at  its  clean  room manufacturing  facility  in Manchester  and  in  the  financial  year  ended

31 March  2020  sold  approximately  45 million  bottles  of  e-liquid,  794,200  vaping  hardware  kits  and

approximately  2.6  million  items  of  other  accessories  and  hardware.  In  the  financial  year  ended

31 March 2020 Supreme sold approximately 2.6 million sports nutrition and wellness products.

The Group’s warehouse, manufacturing clean rooms and distribution facility, which is based at Trafford

Park in Manchester, offers more than 200,000 square feet of space for the Group’s use. This facility was

significantly  improved and expanded  in 2018,  increasing manufacturing capacity  to over 290 million

bottles of e-liquid per annum.

Growth  in Supreme’s  in-house manufacturing  of  own  brands  in  the  vaping  (including  88Vape)  and

sports  nutrition  &  wellness  categories,  in  conjunction  with  increased  direct  to  consumer  online

distribution, has been driving margin expansion in recent years.

Central  to Supreme’s business model  is  the Group’s established and growing network based on six

core channels, which are:

•         Discount Retailers – including B&M, Home Bargains, Poundland, The Range, Matalan, Sports

Direct and Heron Foods;

•         Wholesalers, e-tailers and Symbol Group Retailers – including Booker, Londis, SPAR, Bestway,

and Costcutter;

14

•         Supermarkets and high street – including Asda, Halfords, and Iceland;

•         International customers – including Babou – the French discount chain with more than 95 stores;

•         Public Sector – HM Prison & Probation Service and the Scottish Prison Service; and

•         Direct to consumer online.

The Group services a customer base of over 3,300 active business accounts including retail customers

which have approximately over  10,000 branded  retail  outlets  and  thousands of  independent  stores.

Supreme is also expanding its export sales and currently sells to retailers, e-tailers and wholesalers in

over 45 countries. The Group benefits from a diverse customer base with the largest single customer

representing approximately 23 per cent. and 15 per cent. of total revenue for the year ended 31 March

2020 and 6 months ended 30 September 2020 respectively.

The Group’s online offering is a key focus for Supreme. The Group has recently accelerated the shift

to online sales through its own business-to-business online platform, Supremeoffers.co.uk, where the

Group  provides  goods  to  approximately  1,000  online  business  accounts.  In  addition, Supreme has

increasingly  been  selling  products  direct  to  consumers  through  its  own  online  websites  such  as

88vape.com and ledhut.co.uk where it has approximately 50,000 active accounts. The Group also sells

a number of products through Amazon and eBay international selling programmes.

The Group has a sustained track record of sales growth and profitability and strong cash generation.

The Group’s revenues amounted to £92.3 million  in  the year ended 31 March 2020 with a CAGR of

17 per cent. between 2015 and 2020. The Group generated Gross Profit for the year ended 31 March

2020 of £26.8 million with a CAGR of 34 per cent. between 2015 and 2020, and Adjusted EBITDA for

the year ended 31 March 2020 increased to £16.2 million representing a CAGR of 52 per cent. between

2015 and 2020.

For  the  six  month  period  to  30  September  2020,  the  Group  recorded  unaudited  revenues  of

£56.3 million  and  unaudited Adjusted  EBITDA  of  £8.4 million,  an  increase  over  the  prior  period  of

43 per cent. and 21 per cent. respectively demonstrating highly resilient revenue and profit growth.

The Company is seeking to raise £7.5 million (before expenses) through the Placing, the proceeds of

which will be used  to  fund repayment of bank debt of £7.5 million.  In addition,  the Placing will  raise

£60.0 million (before expenses) for the Selling Shareholders. Further details of the Placing are set out

in paragraph 16 of this Part I.

2. History and background

The business was established in 1975 by Mr GS Chadha, the father of Sandy Chadha (the Company’s

Chief Executive Officer), as a general sales and small wholesaler of goods such as watches, radios,

and clocks. Supreme first entered the consumer battery distribution market in the early 1990s and has

been an official distributor for Panasonic Batteries since 1993, Duracell since 1994, and Energizer since

1998. Supreme also entered the film and videotape distribution business in 2002. In 1998, the Group

moved to a distribution facility in Trafford Park of over 10,000 square feet to support the expansion of

the business. Supreme further expanded the space available to approximately 33,000 square feet  in

2001.

In 2003, Sandy Chadha formed part of a private equity backed buy-out of Supreme where he held a

minority  interest.  The  Group  expanded  its  Trafford  Park  site  in  2005  to  encompass  more  than

50,000 square  feet  of warehouse and office  space.  In  2007,  after  a  period  of  sales  decline, Sandy

Chadha  supported  the  cash  purchase  by Supreme Imports  Limited  of  the  business  and  assets  of

Supreme Imports (Wholesale) Limited from administrators in August 2007.

In February 2008, the Group completed a takeover of Lazoron plc to increase its market share in the

battery market. In 2009, Supreme entered the consumer battery manufacturing market and entered into

a licence to allow the manufacture, production and distribution of batteries under the JCB brand.

Under  Sandy  Chadha’s  leadership,  in  2009  the  Group  diversified  its  product  range  to  include  the

distribution  of  lighting  products. Supreme had  successfully  obtained  a  manufacturing  licence  from

Eveready in 2007 to develop and launch a new range of lighting products under its brand for distribution

in the UK market and those products were first  launched in 2009. This was followed by Energizer  in

15

2013 granting an international manufacturing licence to Supreme to apply the Energizer brand to light

bulbs which was subsequently expanded to incorporate light fittings in 2015. Building on the relationship

with JCB for batteries, in 2016 Supreme obtained a licence to produce and distribute LED light bulbs

under the JCB brand, providing the Group with a varied portfolio of lighting products for the UK, Ireland

and Malta.

In  2013, Supreme entered  the  vaping  market  by  launching  its  first  vaping  brand,  KiK,  which  was

followed  by  the  value focused  brand,  88Vape,  in  2014,  which  has  grown  significantly and  now

contributes the  majority  of  sales  in  the  Group’s  vaping  product  category.  The  Group’s  clean  room

manufacturing facility at its Trafford Park base was opened in 2016 to take control of its own product

supply and the Group expanded into the contract manufacture of e-liquids for third parties in 2017. This

facility was significantly improved and expanded in 2018, increasing manufacturing capacity to over 290

million bottles of e-liquid per annum.

Consistent with its strategy of expanding its portfolio of products into verticals amenable to distribution

through existing customer relationships, Supreme entered the sports nutrition and wellness market in

February 2018 by acquiring manufacturing equipment to allow it to produce a range of protein powders.

The Group has expanded this offering to include other related products such as protein bars and vitamin

supplements initially produced by third parties under the Group’s own and licenced brands. In respect

to vitamins,  the Group currently packages  these products  in-house and the Directors  intend  to bring

more of the manufacturing process in house in the short term.

The Group more  recently enhanced  its  range of  lighting products and  its direct  to customer offering

through the acquisition of the trade and assets of LED Hut Limited in 2019 which includes the online

store,  ledhut.co.uk, and in November 2019 acquired AGP Trading B.V., a wholesaler and importer of

LED light bulbs to supermarkets in the Benelux market. In February 2020 Supreme acquired the issued

share capital of Provider Distribution Limited, a distributor of branded household and cleaning products,

and in October 2020 acquired the issued share capital of GT Divisions Limited, a supplier of protein bar

snacks under the “Battle Snacks” brand.

3. Trading activities

The Group  operates  five  primary  categories,  namely  Batteries,  Lighting,  Vaping,  Sports  Nutrition  &

Wellness, and Branded Household Consumer Goods. Operations are principally based in Manchester,

including, customer services, marketing, accounting, and distribution via the Trafford Park distribution

facility, and manufacturing for e-liquids and sports nutrition wellness products.

Product categories

Batteries

Since Supreme entered the consumer battery market in the early 1990s, the Director’s believe it has

grown to become one of the largest independent branded consumer battery distributors by number of

batteries  sold  in  the  UK  with  a  market  share  estimated  at  approximately 21 per  cent.  supplying

approximately  200  million  batteries  in  the  12  months  to  November  2020. Supreme has  held a

distribution relationship with Panasonic since 1993, Duracell since 1994, and Energizer since 1998 in

addition to an 11 year exclusive licensing relationship with JCB and a 7 year relationship with Philips.

Whilst batteries are predominantly sourced by the Group directly from the brands, Supreme provides

white label batteries to a major UK supermarket. The Group has also developed higher margin models

for licensing and contract manufacturing where, in return for a royalty, Supreme manufactures batteries

using third parties and distributes licenced branded consumer batteries.

The Battery category represented approximately 34 per cent. of Group revenues  for  the year ended

31 March  2020 and approximately  26  per  cent.  of Group  revenues  for  the  six month  period  ended

30 September 2020. For the year ended 31 March 2020, sales of the four bestselling distributed brands

of battery products represented approximately 34 per cent., 18 per cent., 16 per cent. and 8 per cent.

of battery category revenues, with  licence and white  label sales representing 16 per cent. and 6 per

cent. of battery category revenues. For the year ended 31 March 2020, the largest customer and three

largest  customers  represented  approximately  12  per  cent.  and  26  per  cent.  respectively  of  Battery

category revenues (for the year ended 31 March 2019, 12 per cent. and 24 per cent. respectively).

16

Lighting

Supreme’s  lighting  category  distributes  a  wide  range  of  products  to  the  retail  and  trade  markets,

including LED light bulbs, internal and external light fittings, and smart lighting with approximately 23

million  light  bulbs  supplied  each  year. Supreme entered  the  lighting  sector  in  2009  by leveraging

existing  customer  relationships  and  existing  supplier  relationships  with  battery  brands  such  as

Energizer and Eveready. Building on these relationships, the Group established international licensing

agreements with Eveready, Energizer and JCB to launch a range of lighting products where, in return

for a royalty, Supreme procures the manufacture of lighting products using third parties in the Far East

and distributes Eveready, Energizer and JCB branded lighting products. Supreme also provides white

label  lighting products to a major discount retailer. The Group also supplies a range of OEM lighting

products with custom branded packaging and point of sale displays.

In 2019 the Company acquired the trade and assets of LED Hut Limited, an established supplier of LED

lighting to trade and online, predominantly via its own brand Lumilife, allowing the Group to significantly

expand its range of LED products to replace the less efficient light bulbs which are being phased out

by European regulation.

The Lighting category represented approximately 27 per cent. of Group revenues for the year ended 31

March  2020 and  approximately  20  per  cent.  of  Group  revenues  for  the  six  month  period  ended

30 September 2020. Revenues grew at an 18 per cent. CAGR between 31 March 2015 and 31 March

2020. For  the year ended 31 March 2020, sales of  the  three bestselling brands of  lighting products

represented approximately 39 per cent., 28 per cent. and 7 per cent. of lighting category revenues, with

white label, light fittings and own label representing 11 per cent., 8 per cent. and 4 per cent. of lighting

category  revenues.  For  the  year  ended 31 March  2020,  sales  from  the  largest  customer  and  three

largest  customers  represented approximately  35 per  cent.  and 55 per  cent.  respectively  of  Lighting

category revenues (for the year ended 31 March 2019, 29 per cent. and 52 per cent. respectively).

Vaping

Vaping is a next generation nicotine and/or flavour delivery product that is an alternative to tobacco. The

Group’s vaping products use a battery powered device to heat an e-liquid solution to create a vapour

containing  propylene  glycol,  vegetable  glycerin,  and  flavourings,  with  or  without  nicotine,  that are

designed to be inhaled. Supreme first entered the vaping market in 2013 after identifying the opportunity

to create vaping products  that could be distributed  through existing relationships held by  the Group.

Supreme provides a vertically integrated offering to the vaping sector distributed to more than 10,000

branded retail outlets:

•         E-liquids – having initially imported vaping products from the Far East, the Group opened its own

UK based e-liquid manufacturing  facility  in 2016 and  is now,  the Directors believe, one of  the

largest producers of e-liquids in the UK by volume manufacturing approximately 45 million bottles

in  the  year  ended  31  March  2020  and  having  recently  expanded  the  manufacturing  plant’s

production  capacity  to  be  able  to  produce  over  290  million  bottles  per  year. Supreme’s

manufacturing facilities include an on-site clean room for blending and production activities which

is compliant with EU TPD and has an  ISO Class 7 accreditation  from Connect2 Cleanrooms.

Supreme has  an  extensive  product  e-liquid  product  range  with  over  400  SKU’s  across  all

manufactured  brands.  For  the  year  ended  31  March  2020,  sales  of  e-liquids  represented

approximately 71 per cent. of all vaping category revenues, with 88Vape e-liquids, the Group’s

primary vaping brand, representing approximately 94 per cent. of all e-liquids revenues for the

same period with the remainder being the KiK own brand and contract manufacturing for third

parties.

•         Hardware – the Group currently procures the manufacture, importation, and distribution of own

and  customer  branded  vaping  hardware  (such  as  vaping  pens,  pods  and  modification  kits)

from China. For the year ended 31 March 2020, sales of hardware represented approximately

16 per cent. of all vaping category revenues.

•         Pre-filled – Supreme designed a bespoke product  range of pre-filled cartridges specifically  for

HM Prison & Probation Service which were first supplied in 2019 with the potential to expand the

offering to new customers. With manufacturing currently split across in house and with a China

based third party, the Group intends to bring the production of these bespoke pre-filled cartridges

in-house in the short term which is expected to materially improve margins on this product. For

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the year ended 31 March 2020, sales of pre-filled represented approximately 8 per cent. of all

vaping category revenues.

The Group also supplies a small number of varied products containing cannabidiol (“CBD”), although

these contribute a de minimis amount to Group revenues.

88Vape is the Group’s primary vaping brand launched in 2014 and was initially designed for supply into

discount and single price retailers but has subsequently evolved into a market leader targeting a wider

consumer base. The product consists of both vaping hardware and e-liquids and is currently distributed

to  a  broad  range  of  retailers  and  discount  retail  chains  (for  example Asda, B&M,  Home  Bargains,

Iceland,  Poundland  and  Bestway,  Londis,  Costcutter, QD  Stores,  The  Range  and  Original  Factory

Shop),  specialist  vape  stores  (for  example  Vape  Club  and  Electronic  Tobacconist),  HM  Prison &

Probation Service and the Scottish Prison Service (indirectly), and direct online sales to the consumer

via the Group’s own-branded website, 88vape.com.

Direct  to  consumer  sales  of  88Vape  products  have  shown  significant  growth  and  recorded  over

7,000 new customers per month with a 19 per cent. conversion rate and an average basket size of £18

for the period January to September 2020.

Through  the Group’s  in-house  research  and  development  and  testing  capabilities within  its Trafford

Park facility, the Group can create new flavour combinations which allows the Group to respond quickly

to changing consumer demands and trends. The Group has developed and is currently producing over

60 flavours of e-liquids in varying nicotine strengths all of which are registered with the MHRA.

The Vaping category  represented approximately 31 per cent. of Group  revenues  for  the year ended

31 March  2020 and approximately  34  per  cent.  of Group  revenues  for  the  six month  period  ended

30 September 2020. Revenue grew at a 27 per cent. CAGR between 31 March 2018 and 31 March

2020. For the year ended 31 March 2020, sales from the largest customer and largest three customers

represented 28 per cent. and 55 per cent. respectively of vaping category revenues (for the year ended

31 March 2019, 30 per cent. and 60 per cent. respectively).

Sports Nutrition & Wellness

Supreme entered the sports nutrition and wellness market in February 2018 by acquiring manufacturing

equipment to allow it to produce a range of protein and other sports powders and has since expanded

its  capabilities  to  include  other  nutrition  products  such  as  protein  bars,  snacks,  drinks  and  vitamin

supplements which are sold in approximately 1,000 stores across the UK. The category now includes

own label brands (including Protein Dynamix and gonutrition)  in addition to contract manufacturing a

range of protein powders, snacks and drinks which are retailed exclusively by B&M. Supreme recently

entered  the  vitamin  supplements  market  and  in  October  2020  acquired GT  Divisions  Limited,  a

business  that markets and sells a  range of  low sugar high protein snacks under  the brand of Battle

Snacks. The Group has also secured orders to supply sports nutrition and wellness products  to HM

Probation & Prison Service and the Scottish Prison Service.

The Sports Nutrition & Wellness category represented approximately 5 per cent. of Group revenues for

the year ended 31 March 2020 and approximately 4 per cent. of Group  revenues  for  the six month

period  ended  30  September  2020.  Revenues  grew by 108 per  cent. between  31 March  2019  and

31 March 2020. For the year ended 31 March 2020, sales from the largest customer and three largest

customers  represented  48  per  cent.  and  73  per  cent.  respectively  of  Sports  Nutrition  &  Wellness

category revenues (for the year ended 31 March 2019, 64 per cent. and 90 per cent. respectively).

Branded Household Consumer Goods

Supreme supplies a wide  range of branded household consumer goods  through  its sales channels.

Whilst  the Branded Household Consumer Goods category  represented approximately 2 per cent. of

Group revenues for the year ended 31 March 2020, the acquisition of Provider Distribution in February

2020  is  anticipated  to materially  increase  the  scale of  the  category and  for  the  six month period  to

30 September 2020, represented approximately 16 per cent. of Group revenues. For the year ended

31 March  2020,  a  period  primarily  before  ownership  by  the  Group,  Provider  Distribution  reported

unaudited revenue of £13.2 million at a 9.9 per cent. gross margin.

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Provider Distribution is a wholesaler of branded toiletries (for example Oral-B and Colgate toothpaste,

Dove soap, Head & Shoulders shampoo) and household products (for example Domestos, Ariel and

Pledge cleaning products) with a focus on discount retailers, wholesalers and convenience stores and

provides  a  high  degree  of  crossover  with  the  Group’s  existing  customers  strengthening  existing

relationships by increasing basket size.

Channels to market

The Group has six primary channels to market for its products: (1) wholesale, e-tail and Symbol Group

Retailers  (2)  discount  retailers  (3)  supermarkets  (4)  international  customers  (5)  public  sector  and

(6) direct to consumer online. Whilst the customers for each product category overlap, there remains

significant opportunity for further cross selling of Supreme’s products across customer relationships.

• Wholesale, e-tail and Symbol Group Retailers

The  heritage  of  the  business  was  the  supply  of  batteries  to  wholesalers  and  symbol  group

retailers.  This  extensive  customer  base  is  long  term  and  provides  a  stable  and  balanced

distribution  network  with  a  well-established  geographic  footprint  across  the  UK.  Wholesale

customers include Booker, Bestway, Bunzl and a global tobacco company. Symbol Group Retail

customers include Londis, Spar, and Costcutter. Supreme also services the retail market through

a trade focused portal on its website which facilitates direct orders, allowing business customers

to re-stock multiple products in a single order. In the year ended 31 March 2020, 22 per cent. of

Group sales were to wholesale, e-tail and symbol group retailers.

• Discount retailers

The  business  extended  to  serving  discount  retailers  where Supreme is  now  an  established

supplier of batteries, lighting, sports nutrition and wellness products, and vaping products. The

Directors believe  that Supreme is now positioned with  leading battery brands as an  important

channel  to  the discount market which has experienced strong and consistent growth  in recent

years. The strength of the discount retail customer base has supported the rapid growth of the

Group’s  vaping  products  sales  and  continues  to  provide  an  opportunity  for  further  product

extension. Discount retail customers include Home Bargains, B&M, Poundland, The Range and

Sports Direct. In the year ended 31 March 2020, approximately 47 per cent. of Group sales were

to discount retailers.

• Supermarkets and high street

Supreme is achieving increased penetration into supermarkets. The Group supplies white label

and  own  brand  licensed  products, such  as batteries, and  88Vape  products.  Supermarket

customers  include Asda and Iceland.  In the year ended 31 March 2020, approximately 12 per

cent. of Group sales were to supermarkets and high street retailers.

• International customers

Supreme has a growing portfolio of international customers across all product categories. In the

year ended 31 March 2020,  the Group sold products  to over 300 distributors  in more  than 45

countries,  including Babou – the French discount chain with more  than 95 stores. In  the year

ended  31  March  2020,  approximately  10  per  cent.  of  Group  sales  were  to  international

customers.

• Public sector

The  Group  currently  supplies  88Vape  products  to  HM  Prison  &  Probation  Service  and  the

Scottish Prison Service facilitated through a wholesale customer. This relationship has enabled

Supreme to cross sell protein products to these customers. In the year ended 31 March 2020,

approximately 3 per cent. of Group sales were indirectly made to the public sector.

• Direct to consumer online

The Group has direct sales to consumers, through online retail stores selling batteries, lighting,

and vaping products. The recent acquisition of LED Hut Limited has provided the Group with a

significantly larger direct to consumer channel for lighting products. The sale of products online

has  grown  significantly  with  revenues  for  the  year  ended  31  March  2020  of  £3.63  million

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representing a 117 per cent. increase on prior year and this growth accelerated further during the

COVID-19 movement  restrictions in  the  UK in 2020.  In  the  year  ended  31 March  2020,

approximately 4 per cent. of Group sales were direct to consumer online. Total sales online (e-tail

plus direct  sales  to consumers)  in  the year ended 31 March 2020  represented 8 per  cent. of

Group sales.

On  a  revenue  geographic  basis,  the  UK, Rest  of Europe  and  the  Rest  of  the  World  represented

89 per cent., 9 per cent. and 1 per cent. respectively of Group revenues for the year ended 31 March

2020 (86 per cent., 13 per cent. and 1 per cent. respectively for the year ended 31 March 2019).

4. Market overview and competition

Batteries

Statista estimates the UK battery market was £609.9 million in 2019 and Mordor Intelligence expects

the overall European market to grow by a CAGR of 8.6 per cent. over the next 5 years, however the

Directors believe that the majority of this growth will come from battery types outside the Group’s core

products. Competitors to the Group include battery brands selling directly to customers and distribution

businesses such as Anand International Limited and Baruch Enterprises Limited.

Lighting

According to Euromonitor, the European retail market size for LED light bulbs in 2019 was estimated at

approximately £3.0 billion, 13 per cent. of which is related to the UK market and is projected to grow to

approximately £4.3 billion in 2022, 13 per cent. of which is expected to relate to the UK market. The

lighting  market  has  been  significantly  impacted  by  regulation  with  incandescent  bulbs  and

non-directional  halogen  lamps already  being  phased out with  the  objective  of  forcing  consumers  to

purchase more energy efficient LED lighting products.

The  Directors  believe  price  competition  for  LED  lighting  products  benefits  value  brands  such  as

Energizer and Eveready,  the  lighting category’s two largest brands. The Group’s competitors  include

brands  selling  directly  to  customers,  and distribution  and manufacturing  businesses  such as Status

International UK Limited.

Vaping

According  to  Euromonitor,  the  European  vaping  market  is estimated  to  be  worth  approximately

£5.3 billion  in 2019  (40 per  cent.  of which  is  related  to  the UK market)  and  is  projected  to grow  to

approximately  £6.8  billion  in  2022  (45  per  cent.  of  which  is  related  to  the UK market),  a CAGR  of

8.7 per cent. The market  has  seen  strong  growth,  particularly within  discount  channels  and  online.

Market growth is being driven by increasing numbers of smokers using vaping as a means of giving up

smoking, general awareness of vaping as a safer alternative to smoking alongside endorsements by

UK public health bodies, wider access to products both on the high street and online and, the Directors

believe, innovation within the category.

The vaping market is fragmented, with a number of different manufacturing models being followed by

competitors which include (i) manufacture own brand and white label (ii) manufacture own brand only

(iii) brand only with no manufacturing and (iv) big tobacco owned brands which both manufacture and

outsource to white label manufacturers. The 88Vape brand is positioned as a high quality value brand

which provides clear differentiation from other market participants that show higher retail price points

for  their products. Based on more  than 1 million estimated users of 88Vape products,  the Directors

believe that 88Vape is the leading value vaping brand in the UK.

Sports Nutrition & Wellness

The UK  sports  nutrition market  is  experiencing  strong  growth  because  of  several  structural  drivers.

These include increasing health awareness in an ageing population, a shift  in the demographic base

consuming sports nutritional products to lifestyle and recreational users, and the impact of ecommerce

and  online  sales  providing  variety,  convenience,  and  information  to  consumers.  According  to

Euromonitor  in  2019,  the European  retail  value  for  sports  nutrition  products  (including  protein  bars,

powders and sports protein ready to drink and non-protein products) was estimated at approximately

£2.7 billion and is forecast to grow to approximately £3.2 billion by 2022, a CAGR of 6 per cent. The

value  of  the  European  healthcare  supplements  market,  comprising  vitamins,  dietary  supplements,

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weight management and  supplements, was estimated at  approximately £12.6 billion  in 2019 and  is

forecast to grow to approximately £14.8 billion in 2022, a CAGR of 5 per cent.

Branded Household Consumer Goods

According to Euromonitor the UK retail market size for Home Care and Beauty & Personal products was

estimated at approximately £4.0 billion and £13.2 billion respectively  in 2019. Within the Home Care

market, Laundry Care  is  the  largest proportion of retail value with £1.8 billion  in 2019 and within the

Beauty & Personal care market Skin Care and Fragrances are the largest subsectors with £3.0 billion

and £1.9 billion, respectively, of retail value in 2019. The fastest growing subsector in the Home Care

market is expected to be Surface Care with an estimated growth from 2019 to 2020 of 8 per cent. and

a 3.6 per cent. CAGR from 2019 to 2022 driven by increased use of surface disinfectants on account

of the COVID-19 pandemic.

5. Business operations

Corporate structure

The  Company  has  two  primary  wholly  owned  trading  subsidiaries:  VN  Labs  Limited  and Supreme

Imports Limited. VN Labs Limited  is  responsible  for all manufacturing operations  for  the Group and

sources  raw materials and employs all manufacturing  labour. Manufactured  finished goods are  then

usually sold to Supreme Imports Limited, the primary customer of VN Labs Limited. Supreme Imports

Limited is responsible for most onward sales to customers of both manufactured and bought-in products

across all ranges.

Distribution and warehousing

The  Group’s  headquarters  are  located  at  its  manufacturing,  warehouse  and  distribution  facility  in

Trafford Park, Manchester at which it has available to it more than 200,000 square feet. The Group has

a warehouse management  system which  enables Supreme to  dispatch  approximately  2,000  orders

each  day  from  its Trafford Park  distribution  facility,  servicing  approximately  53,000  active  retail  and

online customer accounts each year. The Group’s  retail  customers have over 10,000 branded  retail

outlets and thousands of independent stores.

The Group can deliver most of its orders within 48 hours of receipt of order. Its systems can add new

product lines with minimal manual intervention or training due to the electronic tagging of products and

automated stock management. The Group outsources most of its distribution to third party carriers and

haulage firms.

The  Directors  believe  that  the  Group’s  manufacturing,  warehousing,  and  distribution  facilities  can

support Supreme’s growth and continued diversification for the foreseeable future.

Manufacturing

E-liquids – the Group operates an e-liquid manufacturing plant at  the Trafford Park facility producingown  brand  products  and  contract  manufacturing  for  third  parties.  The  laboratory  and  clean  room

manufacturing facility was opened in 2016 and was upgraded in 2017. In September 2019, Supreme

opened  its  new  manufacturing  facility  equipped  with  10  fully  automated  lines. Supreme’s  e-liquid

production complies with the EU Tobacco Products Directive legislation and its cleanroom facilities for

blending  and  production  activities  have  ISO  Class  7  accreditation.  The  facility  has  the  capacity  to

produce over  290 million  bottles  of  e-liquid  per  year  and  currently  produces approximately  250,000

bottles each day or more than 50 million bottles of e-liquid annually. The facility currently operates 10

fully automated bottling and packing  lines and 8 manual  filling  lines  to produce bottled, packed and

boxed 10ml e-liquid bottles. In house research and development and testing facilities are also based at

the Trafford Park facility.

Sports Nutrition & Wellness – the Group operates a protein powder blending and production facility atthe Trafford Park site for own brand products and contract manufacturing for  third party brands. The

production  facilities  are  ISO Class  9  accredited  and  currently  have  capacity  to  produce more  than

8 million protein powder products each year.  In addition, Supreme repacks bulk vitamin products  for

retail  consumption  and  operates  an  onsite  vitamin  production  facility  blending  product  from  raw

materials with, the Directors’ believe, capacity to produce more than 17 million tablet units per annum

based on 24 hour production. Supreme’s range of protein bars have to date been manufactured by third

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parties.  In October 2020,  the Group acquired GT Divisions Limited, a consumer brand offering a  full

range of protein bars and which are produced by a third party. The Group works to GMP standard in

the production of all own products with all third party suppliers also meeting the GMP standard.

6. Key strengths of the Group

A vertically integrated platform that takes leading brands to an extensive retail network

Supreme offers a vertically integrated platform to leading brands with capabilities throughout the value

chain  including  research  and  development,  product  design,  marketing,  packaging,  manufacturing,

integrated warehousing systems and B2B online ordering. Supreme is then able to distribute products

through its extensive retail network of retail customers which have over 10,000 branded retail outlets

and  thousands of  independent  retailers. This platform enables  the Group  to efficiently scale up new

products, brands and categories that are added, as has been the case for vaping products and sports

nutrition & wellness products.

Products exposed to growing underlying markets with high repeat customers for the Group’sproduct categories

According to Euromonitor the vaping market in the UK is expected to grow at a 13 per cent. CAGR from

2019 to 2022 underpinned by support from established UK public health bodies and shifting consumer

preferences  to  smoke-free  tobacco  products.  The  sports  nutrition  (including  protein  powders  and

protein snacks) and vitamins markets  in the UK are expected to grow at 9 per cent. and 7 per cent.

CAGR from 2019 to 2022 respectively supported by  the growing  focus on  fitness and healthcare by

recreational fitness users. The UK LED market is expected to grow at a 10 per cent. CAGR from 2019

to 2022  reinforced by structural  tailwinds  from a greater  focus on energy efficiency and demand  for

more aesthetic lighting products.

Supreme’s  batteries,  lighting  and,  for  users,  vaping  and  sports  nutrition  &  wellness  products  are

consumer staples and as such are less sensitive to economic conditions. Batteries and lighting product

sales are characterised by repeat purchases. Vaping and sports nutrition & wellness product sales are

supported by established consumption behaviours, which have been evidenced by performance of the

two categories during the COVID-19 movement restrictions in the UK in 2020.

Strong relationships with a diversified, customer base

Supreme sells products to a broad range of established customers, many of whom have been long term

customers  of  the Group. The  largest  single  customer  represented 23 per  cent. and 15 per  cent. of

Group  revenue  for  the  year  to  31  March  2020 and  6  month  period  ended  30  September  2020

respectively, whilst the top 10 customers accounted for 56 per cent. of Group revenue in the year to

31 March 2020. The Directors believe  that Supreme’s  long term relationships with  its customers are

built on the Group’s ability to continually deliver quality products, innovation and a quality service. The

Group’s strong focus on discount retailers allows for a large consumer reach within the UK market while

providing a significant potential for growth. Through cross-selling of Supreme’s products to customers,

the Company cultivates sticky and resilient relationships.

Long term entrenched supplier relationships

Supreme has  long  term  relationships  with  Duracell,  Panasonic,  Energizer  and  JCB. Supreme has

grown to become one of the UK’s largest independent branded consumer battery distributor by number

of batteries sold  in  the UK. Since Supreme entered  the  lighting sector  in 2009,  it has built on  these

relationships  establishing  international  licensing  agreements  with  Eveready,  Energizer  and  JCB  to

launch a range of lighting products where, in return for a royalty, Supreme procures the manufacture of

lighting  products  using  third  parties  in  the  Far  East  and  distributes  Eveready,  Energizer  and  JCB

branded lighting products. These long term relationships evidence the ability of the Group to penetrate

and effectively service its customer base. The distributor and licensing model is firmly established within

the  lighting  and  battery  markets,  as  retailers  look  for  a  mixed  supply  for  fulfilment  of  orders  and

Supreme has the breadth and depth of products to satisfy these customers’ requirements.

A business model that is resilient in the current environment

The Group  has  delivered  a  strong  financial  performance  notwithstanding  global  disruption  resulting

from the COVID-19 pandemic demonstrating the resilience of the business. As detailed in paragraph 15

22

of Part I of this document, Supreme showed significant growth in revenue and profitability for the six-

month period to 30 September 2020. The Directors believe that this strong trading performance across

its  product  categories,  further  emphasises  the  non-discretionary  nature  of  the  Group’s  product

categories. Supreme’s warehousing and manufacturing facilities remained operational throughout the

COVID-19 related movement restriction periods allowing uninterrupted supply to all channels to market.

Complementary products drive higher utilisation

The  range  of Supreme’s  product  portfolio  allows  the Group  to  fulfil  the  re-stocking  requirements  of

independent retailers and wholesalers for entire product categories, utilising multiple brands and SKUs.

The Group’s primary warehouse location enables the efficient packing and distribution of orders. Higher

order values and distribution utilising pallets increase Supreme’s margins by lowering the average cost

of distribution.

The Group has built a leading vaping brand which is protected by significant barriers to entry

Following  years  of  considerable  growth  and  an  extensive  and  far  reaching  UK  brand  building

advertising campaign  in 2019, 88Vape was shown  in a  recent  independent market survey  to be  the

most visible value vaping brand in the UK. The advertising restrictions introduced in 2016, together with

market regulation, have helped the Group grow and protect its most established brand, 88Vape, from

new market entrants. The Directors believe  that  the emphasis on quality of product and distribution

channels has promoted incumbent EU-based production. This has favourably positioned the Group with

its customers, both  in  the manufacture of  its own brand products and contract manufacture  for  third

parties.

Ownership of UK based e-liquid manufacturing facility is a differentiator and providescompetitive advantage

Owning one of the largest e-liquid manufacturing facilities in the UK provides the Group with security

over  both  its  supply  and  quality  of  e-liquid  enabling  better  control  of  its  own  supply  chain  and

compliance  with  TPD  and  as  a  consequence,  is  an  attractive  facility  for  third  party  contract

manufacturing. The facility enables the in-house product research and development team to innovate

and develop new e-liquid products thereby providing flexibility as taste trends change.

Established footprint in Sports Nutrition & Wellness creates material growth opportunity

Following entry into sports nutrition & wellness products in February 2018, the Group has grown this

category  to  report  approximately  £5.0 million  revenues  for  the  year  to  31 March  2020  through  the

manufacture  of  products  under  both  its  own,  and  third  party  brands. More  recently  the Group  has

expanded  the product offering  to  include health supplements and vitamins  for which  the Group has

already received initial orders from large customers. The Directors believe this category represents a

significant opportunity for future growth.

Attractive financial profile and consistent record of delivering growth

Supreme has grown its sales since 31 March 2015 at a CAGR of 17 per cent.  to 31 March 2020 by

virtue  of  increasing  the  type  and  number  of  channels  to market  for  its  products  and  using  existing

channels to develop new product categories. Supreme has grown Adjusted EBITDA from £2.0 million

to £16.2 million between 2015 and 2020, a CAGR of 52 per cent. Group Adjusted EBITDA margin has

benefited  from higher  growth categories such as Vaping and Sports Nutrition & Wellness that have

higher gross margins than the Group overall (40 per cent. and 43 per cent. respectively in respect of

the year to 31 March 2020) which are improving over time as result of enhanced cost efficiencies.

Strong management team with extensive operational experience

Supreme has a senior management team with an aggregate of more than 90 years’ industry experience

and has a proven track record of delivering successful operational solutions and services. This team

has  successfully  driven  organic  growth  and  helped  change  the  Group’s  strategic  focus  to  target

complementary industry sectors to position Supreme for future growth. The Group has a stable, long

serving work force supporting the management team and as at 31 December 2020 employed more than

192 staff.

23

7. Compliance with ESG standards

The Directors believe that environmental, social and governance standards should be at the forefront

of  the Group’s  business  considerations. The Board  has  considered  how  its  practices  align with UN

Sustainable Development Goals and believe they align in the following ways:

Vaping Lighting Sports Nutrition & Wellness

          

          

          

Supply Chain

  

8. Growth strategy

The Group has a track record of Adjusted EBITDA growth and intends to further grow its business. The

Directors believe the Group will achieve growth by taking advantage of the following:

Growth of customers

Supreme’s target customer segment of discount retailers has been, the Directors believe, one of the

strongest  performing  groups  in  the  consumer  market  in  recent  years  and  is  expected  to  continue

increasing its market share in the UK. The Group intends to increase its sales to discount retailers by

expanding its product listings and benefiting from the continued store roll-out of those discount retailers,

such as B&M, Home Bargain and The Range. The Group will also continue to expand internationally

though the European networks of existing customers.

Good Health and Well-Being

Sports nutrition products,

including protein and vitamins,

promote a healthy active

lifestyle

Sustainable Cities &Communities

The activities of the Group

provide accessibility to more

efficient lighting products

Good Health and Well-Being

Vaping is widely accepted as

aiding smoking cessation

reducing the significant negative

impacts of smoking

Climate Action

The Group’s vegan protein

powder range of products is a

more sustainable source of

protein. New vitamin own brand

products expected to use

plastic free packaging

Climate action

Supreme manufacturers and

distributed energy efficient

lighting products, such as

LED light bulbs, reducing

electricity demand

Decent work and economicgrowth

Working with HM Prison &

Probation Service to give

ex-offenders the opportunity to

work at the Group’s

manufacturing facility

Reduced Inequalities

Manufacturing and distributing

products to the discount sector

increases the availability of

goods to those that need it

Reduced inequalities

Manufacturing and

distributing products to the

discount sector increases the

availability of goods to those

that need it

Reduced inequalities

Manufacturing and distributing

products to the discount sector

increases the availability of

goods to those that need it

Exploring green energy tariffs and manufacturing

efficiency

• Supreme is exploring the option to switch to

green tariffs to minimise the environmental

impact of its facilities

• Supreme operates efficient manufacturing

optimising output through automated

production processes

Climate Action

Reducing carbon footprint through better supply

chain utilisation

• On shoring manufacturing to the UK has

reduced carbon emissions related to transport

and shipping of products

• Continued cross selling of products enhances

distribution network utilisation and reduces

emissions impact from transportation

• Use of UK based suppliers minimises carbon

footprint to a predominantly UK customer

base

24

Growth in the LED market

The  demand  for  LED  lighting  is  expected  to  grow  driven  by  regulatory  changes,  desire  for  energy

efficiency,  and  its  growing  affordability.  Reduction  in  manufacturing  costs  have  made  LEDs  more

affordable for consumers and improved margins for manufacturers and distributors. The Directors also

believe that the reduction in manufacturing costs in the market has reduced LED bulb life expectancy

from circa 10 years  to circa 3 years as affordability has been prioritised over  longevity, as such  the

replacement  cycle  has  shortened  for  LEDs  helping  bolster  long-term  demand.  It  is  estimated  by

Euromonitor  that revenue from LED lights  in Europe could reach £4.3 billion by 2022 representing a

11.4 per cent. CAGR from 2019 to 2022.

The market for vaping is expanding rapidly

The wider  vaping market  continues  to grow due  to  regulatory drivers, national health body support,

value compared to tobacco products and continued customer adoption. It is estimated by Euromonitor

that revenue from vaping products in Western Europe could reach £6.8 billion by 2022 representing a

8.4 per cent. CAGR from 2019 to 2022. The adoption of vaping by smokers is a trend that is growing

globally  with  increasing  numbers  of  smokers  switching  for  health  and  financial  reasons.  Significant

market opportunity remains as, according to a survey by Ash in October 2020, 38.3 per cent. of vape

users are still smokers and menthol cigarettes now outlawed in the UK. The Directors believe the Group

is well positioned to capture the growth in demand from an expanding market.

Sports nutrition and wellness market is underpinned by structural growth drivers

Continued  growth  is  expected  in  the  sports  nutrition  and  wellness  markets  as  demand  for  these

products  is  driven  by  the  growing  popularity  of  active  and  healthy  lifestyles.  It  is  estimated  by

Euromonitor  that  revenue  from  sports  nutrition  in  Europe,  which  includes  protein  powder  products,

could reach £3.2 billion by 2022 representing a 6 per cent. CAGR from 2019 to 2022. The increasing

usage  of  protein  products  is  expected  to  be  driven  by  greater  uptake  by  recreational  users,  as

consumers become more serious and committed around their fitness regimes. Additionally, an ageing

population is expected to compel a greater focus on healthcare supplements as supplements become

a regular component of a healthy lifestyle.

Strong growth track record in Vaping category with significant room for further growth

Supreme’s vaping products are becoming more prominent as shelf space and positioning  improves,

and as retailers add more SKUs, driven by customer demand and breadth of flavour choices. 88Vape

is one of the most well-known brands in the UK with a significant market share by volume. Supreme’s

growth will be further supported, the Directors believe, by continued innovation of the vaping product

offering, effective marketing to strengthen brand awareness of the 88Vape brand, additional scaling of

manufacturing capabilities with the potential for cost savings, and expansion into international markets.

It  is  also anticipated  that  growth will  be more widely  supported as a  result  of  the UK government’s

ambition for England to be smoke free by 2030, defined in its 2017 tobacco control plan as a smoking

rate below 5 per cent.

Expansion of the Sports Nutrition & Wellness category offers significant growth opportunity

The Sports Nutrition & Wellness category has delivered strong growth and is expected to continue to

grow with a focus on own brand and third party manufacturing resulting in expansion of on-site protein

production  facilities,  the  addition  of  new  product  categories  such  as  health  supplements,  targeted

activities  to  grow  brand  awareness  across  the  category,  and  a  strengthening  of  online  channels  to

market.

Well established Lighting category with further growth potential

Growth  in  the  Lighting  category  will  be  driven  by  maintaining  strong  customer  relationships,

international  expansion  through  the  Eveready  and  Energizer  international  licensing  agreements,

demand from customers for new products such a smart lighting, and margin expansion driven by growth

in  business  to  business  sales  revenues  and  stable  selling  prices  but  falling manufacturing  costs  of

LEDs.  The  lighting  category  also  provides  a  portfolio  of  non-discretionary  purchase  products  with

long-term brand and customer relationships which, the Directors believe, creates barriers to entry.

25

Stable platform of battery

The  Directors  believe  that  the  Battery  category  provides  a  stable  and  defensive  position  with  high

revenue  visibility  due  to  repeat  customers. Growth  in  the  Battery  category will  be  driven  by  a  shift

towards higher margin  licensed products and growth  in market share, and an  increased business  to

business sales offering.

Opportunity for expansion into new markets utilising existing distribution network and customerrelationships

The Group will continue to identify new product categories that will appeal to the existing distribution

network  and  customers. The  recent  development  of  the Sports Nutrition & Wellness  category  is  an

example of successfully leveraging Supreme’s distribution platform to move into high growth verticals

with the category growing from a start-up in 2018 to approximately £5 million in revenue for the year

ended 31 March 2020.

Opportunity to expand direct to consumer online offering

Through  the  development  of  its  high-profile  vaping  brand,  88Vape,  the  Group  has  a  significant

opportunity to grow its direct to consumer offering through its online store. With lower distribution costs

and  no  retail  margin,  online  sales  contribute  higher  gross  profit  than  products  sold  through  other

distribution  channels.  Through  the  first  COVID-19  lockdown  between March  and May 2020,  online

channels saw a marked increase in online sales which management believe evidence both the strength

of the brand and the online opportunity without cannibalising existing retail sales. The 88Vape website

has continued to see growing traffic with strong conversion rates and basket sizes, a trend which the

Directors believe will continue as the 88Vape brand grows.

9. Corporate governance

Board

The  Directors  recognise  the  importance  of  sound  corporate  governance  and  intend,  given  the

Company’s size and the constitution of the Board, to adopt and fully comply with the principles set out

in the QCA Code. The QCA Code was devised by the QCA, in conjunction with a number of significant

institutional  small  company  investors  as  an  alternative  corporate  finance  code  applicable  to  AIM

companies and has become a widely  recognised benchmark  for corporate governance of small and

mid-size quoted companies, particularly AIM companies.

Upon  Admission,  and  in  compliance  with  the  recommendations  of  the  QCA  Code,  the  Board  will

comprise five Directors, two of whom will be Executive Directors and three of whom are Non-executive

Directors, reflecting a blend of different experiences and backgrounds as described in paragraph 10 of

Part I of this document. The Directors believe that the composition of the Board brings a desirable range

of skills, diversity and experience considering  the Company’s challenges and opportunities  following

Admission, while at the same time ensuring that no individual or small group of individuals can dominate

the Board’s decision making.

The Directors have determined  that  notwithstanding  the  role of Paul McDonald as  the  former Chief

Financial Officer to B&M, one of the Company’s largest customers by revenue, he is considered to be

independent in character and judgement at the date of his appointment with respect to the Company

because  (i)  his  board  position  at  B&M  ceased  in  November  2020  and  his  employment  ceased  in

January  2021,  and  (ii)  the  value  of  goods  supplied  by Supreme to  B&M  represent  an  immaterial

proportion of B&M cost of sales in any given year and as such, any financial impact derived from this

trading relationship on his ongoing  financial  interests  in B&M (which  include shares and outstanding

share awards) is considered inconsequential.

The  Board  has  appointed Mark  Cashmore as  the  Senior  Independent  Director  to  be  available  to

Shareholders if they have concerns over an issue that the normal channels of communication (through

the Chair, the Chief Executive Officer or the Chief Financial Officer) have failed to resolve or for which

such channels of communication are inappropriate.

The Board intends to meet regularly to review, formulate and approve the Group’s strategy, budgets and

corporate actions and oversee the Group’s progress towards its goals. The Company has established

an Audit Committee,  a Remuneration Committee,  and  a Nomination Committee,  each with  formally

26

delegated duties and responsibilities and with written terms of reference. From time to time, separate

committees may be set up by the Board to consider specific issues when the need arises.

Audit Committee

The Audit Committee will have the primary responsibility of monitoring the quality of internal controls to

ensure that the financial performance of the Group is properly measured and reported on. It will receive

and  review  reports  from  the Group’s management  and  external  auditors  relating  to  the  interim  and

annual accounts and  the accounting and  internal control systems  in use  throughout  the Group. The

Audit Committee will meet not  less than three times in each financial year and will have unrestricted

access  to  the  Group’s  external  auditors.  The  members  of  the  Audit  Committee  shall  include

Non-executive Directors. The Audit Committee comprises Simon Lord (as Chair), Paul McDonald and

Mark Cashmore.

Remuneration Committee

The Remuneration Committee will review the performance of the Executive Directors, chairman of the

Board  and  senior management  of  the Group  and make  recommendations  to  the Board  on matters

relating  to  their  remuneration  and  terms  of  service.  The  Remuneration  Committee  will  also  make

recommendations  to  the  Board  on  proposals  for  the  granting  of  share  options  and  other  equity

incentives pursuant to any employee share option scheme or equity incentive plans in operation from

time to time. The Remuneration Committee will meet as and when necessary, but at least twice each

year. In exercising this role, the Directors shall have regard to the recommendations put forward in the

QCA  Code  and,  where  appropriate,  the  QCA  Remuneration  Committee  Guide  and  associated

guidance.  The  members  of  the  Remuneration  Committee  shall  include  two  Non-executive

Directors. The Remuneration Committee comprises Mark Cashmore (as Chair), Simon Lord and Paul

McDonald.

Nomination Committee

The Nomination Committee will lead the process for board appointments and make recommendations

to the Board. The Nomination Committee will evaluate the balance of skills, experience, independence,

and knowledge on the Board and, in the light of this evaluation, prepare a description of the role and

capabilities required for a particular appointment. The Nomination Committee will meet as and when

necessary,  but  at  least  once each year. The Nomination Committee  comprises Mark Cashmore  (as

Chair), Simon Lord and Paul McDonald.

Relationship Agreement

The Company has entered into a relationship agreement dated 26 January 2021 with Sandy Chadha

and Grant Thornton pursuant to which the Company and Sandy Chadha agree to regulate aspects of

the continuing relationship between them. In particular, Sandy Chadha has agreed to ensure that the

Company  is capable at all  times of carrying on  its business  independently of him (together with any

associates and/or persons with whom he is acting in concert) and that transactions between the parties

are on arm’s length terms and on a normal commercial basis. Further information on the Relationship

Agreement can be found in paragraph 8 of Part IX of this document.

10. Directors and Senior Management

Directors

The Board is comprised of two Executive Directors and three Non-executive Directors.

Paul Andrew McDonald (aged 54), Non-executive Chairman

Paul joined B&M as Finance Director in 2011 and continued as Chief Financial Officer through the IPO

of B&M in 2014 until he retired from the board in November 2020. During his tenure at the UK’s leading

variety goods value retailer, revenue and EBITDA at B&M grew from £764 million and £62.8 million in

2012, to £3.8 billion and £342 million in 2020 respectively. Paul has over 25 years of experience in the

discount retail sector having held senior roles at Littlewoods, Ethel Austin and TJ Hughes. Paul was

educated at Leeds University and is a Fellow of the Association of Chartered Certified Accountants.

27

Sandeep (Sandy) Singh Chadha (aged 52), Chief Executive Officer

Sandy joined the business from school and has been involved in the management of Supreme since

1988.  Sandy  has  grown  the  Group  from  a  revenue  of  approximately  £1 million  to  a  revenue  of

approximately  £92.3  million  for  the  year  ended  31  March  2020.  He  has  been  responsible  for

establishing the business in its current form including the entry into batteries, the substantial growth in

the  business  since  2008,  leveraging  customer  relationships  to  create  the  lighting  category  and

identifying  the  opportunity  to  develop  a market  leading  vaping  business  and  a  sports  nutrition and

wellness business.

Suzanne Gwendoline Smith (née Dick) (aged 38), Chief Financial Officer

Suzanne joined Supreme in August 2020 having spent 15 years in high growth businesses with varied

corporate structures, spanning manufacturing, distribution, and software, including 4imprint Group plc,

Brand Addition (now The Pebble Group plc) and Fourth Limited. Suzanne was part of the management

team  that  led  Fourth Limited through  its  sale  to  Insight  Venture  Partners  in  2016  and  then  to

Marlin Equity  Partners  in  2019  during which  time  the  business  experienced  significant  organic  and

investment-led  growth  and  geographical  expansion.  Suzanne  is  a  Chartered  Accountant  having

qualified at PricewaterhouseCoopers in Audit and Corporate Finance.

Mark Richard Cashmore (aged 60), Independent Non-executive Director

Mark  served  from  2006  and  2018  as  the  Group  Chief  Executive  Officer  at  Connect  Group  PLC

(previously called Smiths News plc), a London Stock Exchange main market listed specialist distribution

group that demerged from WH Smith plc in 2006 and which operated mainly in the business to business

market  focused on serving high volume,  time sensitive early morning deliveries and the demands of

mixed and irregular freight. From 1999 to 2006 he served variously as Managing Director, Commercial

Director, Sales Director, and Sales and Marketing Controller of Smiths News. Prior to his appointment

at Smiths News,  he  held  senior  positions  in  several  news  distribution  businesses,  including United

Magazine Distribution Limited, USM and Seymour Distribution Limited.

Simon Martin Lord (aged 49), Independent Non-executive Director

Simon  is a corporate  finance and mergers and acquisition specialist with over 20 years’ experience

leading transactions in a variety of sectors including tech enabled support services and Industrials. He

has significant private equity experience and has acted for both buyers and sellers on behalf of financial

institutions and owner managers. He is currently a Managing Partner at Arete Capital Partners LLP, a

multi-family  office  investment  business  based  in  Manchester. Prior  to  his  16  years  as  a Managing

Director  and  Head  of  the  Manchester  office  for  GCA Altium Limited,  he  was  a Corporate  Finance

Director at Clearwater International Limited for 6 years. He qualified as a Chartered Accountant in 1997.

Senior management team

Supreme’s  senior management  team  is  comprised of  the  two Executive Directors and  the  following

senior management.

Andrew Beaumont, Commercial Director

Andrew joined the Group over 30 years ago. He heads up the customer services and operations within

the batteries category. Andrew is responsible for a number of individual accounts and for building up

the customer database, targeting new customers and distributing enquires to Supreme’s national sales

team. He maintains a close relationship with a range of customers across all categories from small to

large, carrying out audits and monitoring customer and competitor activity, enabling Supreme to refine

and improve its products, packaging, product range, quality and price.

David Neilson, Divisional Lead – Lighting

David has worked with the Group for more than 15 years and leads the lighting category including new

product  development  from  sourcing  through  to  launch,  supporting  the  sales  team,  marketing,  and

branding.

28

Michael Holliday, Divisional Lead – Vaping

Michael joined the Group in 2013 and leads the vaping and e-liquids category including new product

development  from  sourcing  through  to  launch,  supporting  the  sales  team,  consulting  on  factory

operations, compliance, marketing, and branding. He was previously a sales development executive at

Imperial Tobacco focusing on the North West of the UK.

Dan Clark, Divisional Lead – Sports Nutrition & Wellness

Dan joined the Group in 2019 and leads all areas of the category including sales, marketing, operations,

and new product development and takes overall responsibility for sales growth and profitability. Dan has

over 20 years’ experience  in sports health and wellness and  for  the  last 10 years and has played a

significant part in growing some of the largest sports nutrition companies in the UK and globally.

11. Share dealing policy

The  Company  has  adopted  a  share  dealing  policy  regulating  trading  and  confidentiality  of  inside

information  for  persons  discharging  managerial  responsibility  (“PDMRs”)  and  persons  closelyassociated with them which contains provisions appropriate for a company whose shares are admitted

to trading on AIM and which complies with the Market Abuse Regulation (596/2014/EU). The Company

takes all reasonable steps to ensure compliance by PDMRs and any other employees with the terms

of that share dealing policy.

12. Employee Incentive Schemes

The Directors believe that the recruitment, motivation, and retention of key employees is vital for the

successful growth of the Group. The Directors consider that an important element in achieving these

objectives is the ability to incentivise and reward staff by reference to the market performance of the

Company  in  a  manner  which  aligns  the  interests  of  those  staff  with  the  interest  of  shareholders

generally.

The  Company  has  established  the  EMI  Scheme,  the Supreme plc  Sharesave  Scheme  2021,  the

Supreme plc Company Share Option Plan 2021, the Supreme plc Unapproved Share Option Scheme

2021 and  the  Market  Capitalisation Cash Bonus  Scheme,  further  details  of  which  are  set  out  in

paragraph 5 of Part IX of this document, in order to facilitate these aims.

The Market Capitalisation Cash Bonus Scheme  is  an  all-employee bonus  scheme which will  pay  a

bonus (which the Company may, but is not obliged to, satisfy by the issue of Shares and/or the grant

of options) to all participating employees equivalent to one year’s basic salary if the Company achieves

a  market  capitalisation  of  £1  billion  on  or  before  the  fifth  anniversary  of  Admission.  Participating

employees are those with at least 12 months continuous service at the date this is achieved. Total gross

payments under the scheme are limited to £14,000,000, with all participants’ entitlements being scaled

back accordingly.

The  Company  intends  as  soon  as  practicable  after  Admission,  to  invite  all  eligible  employees  to

participate  in  the Supreme plc  Sharesave  Scheme  2021 and subject  to  confirmation  by  the

Remuneration Committee, to:

•         grant market value options under the Supreme plc Company Share Option Plan 2021 and/or the

Supreme plc Unapproved Share Option Scheme 2021 (over Shares having a market value  in

total of approximately £500,000) to a limited number of employees who were not granted options

under the EMI Scheme or who were granted fewer options than now appears appropriate;

•         establish  a  long-term  incentive  plan  utilising  two  grants  of  nominal  value  options  under  the

Supreme plc Unapproved Share Option Scheme 2021 to Sandy Chadha. Each of the two options

will  be  over  Shares  equating  to  2.5  per  cent.  of  the  issued  share  capital  of  the  Company

immediately after Admission. Each of the options will be subject to a performance condition which

must be wholly satisfied for the relevant option to be exercisable. The performance condition for

the first option is that total shareholder return per Share from Admission until the third anniversary

of Admission  is at  least 100 per cent. of  the Placing Price. The performance condition  for  the

second option is that total shareholder return per Share from Admission until the fifth anniversary

of Admission is at least 200 per cent. of the Placing Price;

29

•         establish a  long-term incentive plan on a  rolling basis utilising annual grants of nominal value

options under the Supreme plc Unapproved Share Option Scheme 2021 to Suzanne Smith with

a market  value of  up  to 100 per  cent. of  her annual  salary  requiring an average annual  total

shareholder return of 10 per cent. over a three-year period to be fully exercisable; and

•         establish  an  appropriate  long-term  incentive  plan  for  the  other  members  of  the  senior

management team and other key employees of the business utilising these schemes.

In  view  of  the  amount  of  its Gross Assets  the Company  is  no  longer  a  qualifying  company  for  the

purposes of the EMI legislation and so has no present intention of granting any further Options under

the EMI Scheme.

13. Dividend policy

The Directors  intend  to pay dividends  to shareholders  in an aggregate annual amount equivalent  to

approximately 50 per cent. of net profits, retaining the balance of earnings from operations to finance

the future expansion of the Group. Such dividend payments are expected to be split  into a one third

interim dividend and a two thirds final dividend. The Company expects to declare the first such dividend

(which will be an interim dividend) following the notification of its interim results for the six month period

to 30 September 2021.

14. ESG Policy

The Directors believe that corporate responsibility and transparency is of paramount importance. The

Group has set out and will continue to set out  its Modern Slavery and Human Trafficking Statement.

Additionally,  the  Company  maintains  a  Whistleblowing  Policy,  a  Bribery  and  Corruption  Policy,  an

Employee Code of Conduct and a Supplier Code of Conduct. The Company undertakes due diligence

when  considering new suppliers  and  regularly  reviews existing  suppliers  to  ensure  compliance with

Supreme’s internal ESG policies. Moreover, the Company will endeavour to implement additional ESG

policies post Admission. Additionally, a Green Procurement Policy will be considered to ensure that all

of Supreme’s suppliers also participate in sustainable practices. Over the medium term, the Company

will  strive  to  enhance  its  ESG  reporting  to  provide  investors  and  the  wider  public  with  further

transparency on the Group’s commitment to positive environmental and social impact.

15. Selected historical financial information and recent trading

The following financial information has been derived from the Historical Financial Information contained

in Parts IV and V of this document and from the unaudited interim financial information in Part VI of this

document and should be read in conjunction with the full text of this document. Investors should not rely

solely on the summarised information set out below.

                                                                                 Supreme Supreme Supreme Imports Imports Supreme Unaudited Audited Audited Audited Six months Year ended Year ended Year ended ended 31 March 31 March 31 March 30 September 2018 2019 2020 2020                                                                              £000                  £000                  £000                  £000

Revenue

Batteries                                                              33,414               33,353               30,944               14,760

Lighting                                                               20,874               22,711               25,347               11,109

Vaping                                                                 17,705               20,958               29,029               19,189

Sports nutrition & wellness                                          –                 2,389                 4,980                 2,177

Branded household consumer goods                      861                    739                 2,029                 9,101

Total revenue 72,854 80,150 92,329 56,336                                                                        ————           ————           ————           ————Cost of sales                                                      (58,080)            (57,463)            (65,509)            (42,054)

30

                                                                                 Supreme Supreme Supreme Imports Imports Supreme Unaudited Audited Audited Audited Six months Year ended Year ended Year ended ended 31 March 31 March 31 March 30 September 2018 2019 2020 2020                                                                              £000                  £000                  £000                  £000

Gross profit

Batteries                                                                3,767                 3,409                 3,282                 1,325

Lighting                                                                 4,538                 5,979                 8,478                 3,364

Vaping                                                                   7,005                 9,399               11,666                 7,105

Sports nutrition & wellness                                          –                 1,180                 2,117                    897

Branded household consumer goods                      209                    207                    329                 1,015

Foreign Exchange                                                  (745)               2,513                    951                    576

Total gross profit 14,774 22,687 26,820 14,282                                                                        ————           ————           ————           ————Administration expenses                                     (8,922)              (9,403)            (12,827)              (7,120)                                                                        ————           ————           ————           ————Operating profit                                                   5,852 13,284 13,993 7,162Finance income                                                           –                      28                        3                        –

Finance costs                                                         (385)                 (599)                 (783)                 (374)                                                                        ————           ————           ————           ————Profit before taxation                                          5,467 12,713 13,213 6,788Income tax                                                           (1,095)              (2,317)              (2,318)              (1,341)                                                                        ————           ————           ————           ————Profit for the period                                            4,372 10,396 10,895 5,447                                                                        ————           ————           ————           ————Adjusted EBITDA 7,699 14,835 16,209 8,398                                                                        ————           ————           ————           ————There has been no significant change  in  the financial position or  financial performance of  the Group

since 30 September 2020, being the date to which the Unaudited Interim Financial Information in Part V

of this document has been prepared. Trading for the period from 30 September 2020 to the date of this

document has been positive and was consistent with the Directors’ expectations.

16. Reasons for Admission, use of Proceeds and the Placing

The  Directors  believe  that  the  Placing  and Admission  will  position Supreme for  its  next  phase  of

development by further raising its profile, incentivising employees, providing it with a platform for future

organic growth and potential acquisitions, and to part repay existing debt facilities. Admission will also

enable  the  Primary  Selling  Shareholder  to  realise  part  of  his  investment  in  the  Company  whilst

maintaining a significant stake in the Company.

On Admission  the  Company  will  have 116,499,980 Shares  in  issue  and  a  market  capitalisation  of

approximately  £156.1 million.  Berenberg  has  agreed,  pursuant  to  the  Placing  Agreement  and

conditional, inter alia, on Admission, to use its reasonable endeavours to place 5,597,015 New Sharesand 44,776,120 Sale Shares with  institutional and other  investors. The Placing will  raise £7.5 million

gross for  the Company and £60.0 million gross for  the Selling Shareholders. The Directors  intend to

apply the net proceeds of the Placing received by the Company, being approximately £5.6 million, to

repay bank debt of £7.5 million.

The Placing, which  is  not  being  underwritten,  is  conditional,  inter alia,  upon  the Placing Agreementbecoming unconditional and not having been terminated in accordance with its terms prior to Admission

and Admission becoming effective not later than 1 February 2021, or such later date as Berenberg and

the Company may agree, being not later than 26 February 2021 The New Shares will rank pari passuin all respects with the Existing Shares including the right to receive all dividends and other distributions

declared, paid or made after the date of issue. None of the Placing Shares have been marketed to or

will be made available in whole or in part to the public in the United Kingdom or elsewhere in conjunction

with the application for Admission. Further details of the Placing Agreement are set out in paragraph 9

of Part IX of this document.

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17. Lock-in and orderly market arrangements

Pursuant to the Placing Agreement, the Company has agreed that, subject to certain exceptions, during

the period of 180 days from the date of Admission, it will not, without the prior written consent of Grant

Thornton and Berenberg, issue, offer, sell, contract to sell or issue, grant any option, right or warrant to

subscribe or purchase or otherwise dispose of any Shares (or any interest therein or in respect thereof),

enter into any transaction with the same economic effect as any of the foregoing or publicly announce

any intention to do any such things.

Pursuant  to  the Placing Agreement,  the Primary Selling Shareholder and each of  the Directors has

agreed to lock-in restrictions, further details of which are summarised in paragraph 9 of Part IX of this

document.

18. Admission, Settlement and Dealings

Application has been made to London Stock Exchange for the Shares to be admitted to trading on AIM.

It  is  expected  that Admission  will  become  effective  and  that  dealings  in  Shares  will  commence  at

8.00 a.m. on 1 February 2021. Shares will be in registered form. The Articles permit the Company to

issue  Shares  in  uncertificated  form  in  accordance  with  the  CREST  Regulations.  CREST  is  a

computerised share transfer and settlement system. The system allows shares and other securities to

be held in electronic form rather than paper form, although a shareholder can continue dealing based

on share certificates and notarial deeds of transfer. Share certificates, where applicable, will be sent to

the registered Shareholder by the Registrar, at such Shareholder’s own risk.

19. Taxation

Your attention is drawn to the taxation section contained in paragraph 12 of Part IX of this document. If

you are in any doubt as to your tax position, you should consult your own independent financial adviser

immediately.

20. The Takeover Code

The Takeover Code applies to the Company. Under the Takeover Code, if an acquisition of interests in

Shares were to increase the aggregate holding of the acquiror, and any persons with whom it is acting

in concert, to interests in Shares carrying 30 per cent. or more of the voting rights in the Company, the

acquiror and, depending on the circumstances, any persons with whom it is acting in concert, would be

required (except with the consent of the Panel) to make a cash offer for the outstanding Shares at a

price not less than the highest price paid for interests in Shares by the acquiror, or any persons with

whom  it  is  acting  in  concert,  during  the  previous  twelve  months.  This  requirement  would  also  be

triggered when,  except with  the  consent  of  the Takeover Panel,  any  person  (together with  persons

acting  in concert with him) who  is  interested  in Shares which carry not  less  than 30 per cent. of  the

voting rights of the Company but does not hold Shares carrying more than 50 per cent. of such voting

rights,  and  such  person  (or  person  acting  in  concert  with  him)  acquires  any  other  Shares  which

increases the percentage of Shares carrying voting rights in which he is interested.

Sandy Chadha, Supreme 8  Limited  (a  company wholly  owned  by Sandy Chadha)  and  the Chadha

Discretionary Trust 2020  (of which Sandy Chadha and Aditi Chadha are  trustees) will be  treated as

acting  in concert with each other  in  relation  to  the Company  for  the purposes of  the Takeover Code

following Admission (the “Concert Party’’). Immediately following Admission, the Concert Party will holdin aggregate 66,126,845 Shares representing 56.76 per cent. of the Enlarged Share Capital (of which

Sandy Chadha personally will hold 35,319,252 Shares), and consequently will hold more than 50 per

cent. of the voting rights of the Company. As such, the Concert Party and its members would normally

be permitted to make purchases of Shares without incurring an obligation under Rule 9 of the Takeover

Code to make a general offer to all holders of Shares.

Further information on the provisions of the Takeover Code can be found in paragraph 16 of Part IX of

this document.

21. Further information

You should read the whole of this document, which provides additional information on the Group and

the Placing, and not just rely on the information contained in this Part I. In particular your attention is

drawn to the risk factors in Part III of this document and the additional information contained in Part IX

of this document.

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PART II

REGULATORY ENVIRONMENT FOR E-CIGARETTES

1. Tobacco Products Directive and the Tobacco and Related Products Regulations 2016

The  principal  legislation  in  the  United  Kingdom  regulating  the  e-cigarette  industry  is  the  Tobacco

Products Directive (Directive 2014/40/EU of the European Parliament and the Council as amended by

Commission Delegated Directive 2014/109/EU) (“TPD”) as implemented by the Tobacco and RelatedProducts Regulations 2016 as amended (the “TRP Regulations”). A brief summary of its terms in sofar as may be applicable to Supreme in the United Kingdom is set out below.

Introduction

The  TPD  introduced  new  rules  for  nicotine-containing  electronic  e-cigarettes  and  refill  containers

(Article 20) from May 2016. This legislation does not cover nicotine based products that are authorised

as medicines. Supreme does not presently manufacture or sell any nicotine based products that are

authorised as medicines. Products such as disposable e-cigarettes  that do not contain nicotine and

0 per cent. nicotine e-liquids are out of scope of the TPD and do not have to meet  its requirements.

These products will continue to be regulated under the General Product Safety Regulations 2005.

The  Medicines  and  Healthcare  products  Regulatory  Agency  (the  “MHRA”)  is  the  UK  competentauthority for the notification scheme for e-cigarettes and refill containers in the UK and is responsible

for implementing the majority of the provisions under Article 20 of the TPD.

The TRP Regulations introduced new rules to ensure:

•         minimum standards for the safety and quality of all e-cigarettes and refill containers (otherwise

known as e-liquids);

•         information is provided to consumers so that they can make informed choices; and

•         an environment that protects children from starting to use these products.

From 20 May 2017, the requirements included:

•         restricting e-cigarette tanks to a capacity of no more than 2ml;

•         restricting the maximum volume of nicotine-containing e-liquid for sale in one refill container to

10ml;

•         restricting e-liquids to a nicotine strength of no more than 20mg/ml;

•         requiring nicotine-containing products or their packaging to be child-resistant and tamper evident;

•         banning certain ingredients including colourings, caffeine and taurine;

•         new labelling requirements and warnings; and

•         requiring all e-cigarettes and e-liquids be notified to the MHRA 6 months before they intend to put

the product on the UK market (although once the notification has been published in the list on the

governmental website, the product can be launched regardless of whether the full 6 months has

elapsed) and also report any health and safety concerns.

Side effects and medical problems can be reported back to the MHRA by consumers and healthcare

professionals via the yellow card reporting system. Consumers can also report products suspected to

be defective or non-compliant to local Trading Standards.

The Tobacco Products and Nicotine  Inhaling Products  (Amendment etc)  (EU Exit) Regulations 2019

made  changes  to  the  way  in  which  tobacco  control  legislation  worked  in  the  UK  with  effect  from

31 January 2020. The regulations included the following changes:

•         amending or omitting EU/EEA/member state references

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•         revoking EU obligations and reciprocal arrangements that will no longer be relevant to the UK

•         transferring relevant commission powers under the Tobacco Products Directive to the Secretary

of State

•         allowing for the establishment of new notification systems for tobacco products and e-cigarettes

•         allowing for the use of Australian picture warnings to replace the ones which are owned by the

commission; and

•         introducing a fee-making power

New Products

The  TRP  Regulations  require  a  producer  who  supplies  or  intends  to  supply  or  modify  electronic

cigarettes or refill containers to notify the MHRA, who act on behalf of the Secretary of State, at least

six months before the date on which the producer intends to first supply a product or a modified product

(although once the notification has been published in the list on the governmental website, the product

can be launched regardless of whether the full 6 months has elapsed). Currently, Regulation 31 of the

TRP Regulations require that the notification must contain the following (so far as it is relevant):

(a)      the  name  and  contact  details  of  the  person  who  manufactures  the  product,  the  importer  (if

applicable) and, if neither is based in an EU Member State, a responsible person within an EU

Member State;

(b)      a list of all ingredients contained in, and emissions resulting from the use of, the product by brand

and variant name, including quantities;

(c)      toxicological data regarding the product’s ingredients (including in heated form) and emissions,

referring  in particular  to  their effects on  the health of consumers when  inhaled and taking  into

account, amongst other things, any addictive effect;

(d)      information  on  the  nicotine  dose  and  uptake  when  consumed  under  normal  or  reasonably

foreseeable conditions;

(e)      a description of the components of the product including, where applicable, the opening and refill

mechanism of the electronic cigarette or refill container;

(f)       a description of  the production process and a declaration that  the production process ensures

conformity with the requirements of Part 6 of the TPD Regulations; and

(g)      a declaration that the producer bears full responsibility for the quality and safety of the product

when supplied and used under normal or reasonably foreseeable conditions.

In the UK this is accomplished by notifying the UK competent authority, namely the MHRA. At present,

producers must submit information about their products to the MHRA through the European Common

Entry Gate (EU-CEG) notification portal. In the event of a no deal Brexit it is anticipated that there willbe  new  domestic  systems  to  allow  manufacturers  to  notify  tobacco  products  and  e-cigarettes,  in

accordance with existing rules.

Under  the TPD,  it  is  the  responsibility of  the producer  to ensure  that  their products comply with  the

requirements of  the TPD. The MHRA may check notifications submitted  for completeness and verify

TPD compliance with producers.

Products that have been substantially modified will count as a new product and must also follow the

notification process.

If a product is made available in the UK under several brand names, the producer will be able to include

all the brand names for the identical products in a single notification, for no additional fee. Each brand

should be listed on the notification as a separate presentation.

The TPD does not include any requirements as to where testing of e-cigarettes and refill container has

to take place. The notifier will need to be satisfied as to the standards of any testing carried out as they

34

have to submit a declaration that they bear full responsibility for the quality and safety of the product

when placed on the market and used under normal or reasonably foreseeable conditions.

Product Requirements

In  addition  to  the  requirements  of  the TRP Regulations  set  out  in  the  Introduction  section as  being

applicable from 20 May 2017 no person may produce or supply an electronic cigarette or refill container

unless  it  complies  with  the  requirements  below  (see,  amongst  others,  Regulation  36  of  the  TRP

Regulations):

•         nicotine-containing liquid in an electronic cigarette or refill container:

(i) must be manufactured using only ingredients of high purity;

(ii) must not contain substances other than the ingredients notified under Regulation 31 of the

TRP Regulations, unless present in trace levels, where such trace levels are technically

unavoidable during manufacture; and

(iii) must not  include  ingredients  (except  for nicotine) which pose a  risk  to human health  in

heated or unheated form.

•         an electronic cigarette must be able to deliver a dose of nicotine at consistent levels under normal

conditions of use.

•         an electronic cigarette or refill container must have a mechanism for ensuring re-filling without

leakage (unless it is a disposable electronic cigarette).

•         requiring every flavour of e-liquid developed go through ingredient testing and assessment.

Vigilance and Notification of Safety Concerns

Regulation  39(1)  of  the  TRP  Regulations  requires  that  a  producer  of  electronic  cigarettes  or  refill

containers must establish and maintain a system for collecting information about all of the suspected

adverse effects on human health of the product.

E-cigarette producers must inform the MHRA if they have reason to believe that a notifiable product is

unsafe, not of good quality or not compliant with the TPD Regulations and provide details of the risk to

human health and safety and any corrective action  taken. Regulation 39(3) of  the TRP Regulations

provides that if any of the above occur the producer must (as appropriate):

(a)      immediately  take  the corrective action necessary  to bring  the product  into conformity with  this

Part of the Regulations;

(b)      withdraw the product;

(c)      recall the product.

Trading Standards bodies have enforcement responsibilities under the legislation and the MHRA works

with them to ensure acceptable standards of safety.

Labelling and Leaflets

Regulation 37 of  the TRP Regulations sets out  the requirements  for  labelling of e-cigarette and refill

container products. It requires that each unit packet of the electronic cigarette or refill container must

include a leaflet with information on:

(a)      instructions  for  use  and  storage  of  the  product,  including  a  reference  that  the  product  is  not

recommended for use by young people and non-smokers;

(b)      contra-indications;

(c)      warnings for specific risk groups;

(d)      possible adverse effects;

(e)      addictiveness and toxicity;

35

(f)       contact details of the producer; and

(g)      if the producer is not based in a member State, a contact person within a member State.

Each unit packet and any container pack must include:

(a)      a list of all ingredients contained in the product set out in descending order by weight;

(b)      an indication of the nicotine content of the product and the delivery per dose;

(c)      the batch number; and

(d)      a recommendation to keep the product out of reach of children.

In accordance with a general  interpretation of Article 20(4) of  the TPD, all  ingredients  in  the product

should be  listed on  the  label where  they are used  in quantities of 0.1 per cent. or more of  the  final

formulation  of  the  e-liquid. Where  a  flavour  ingredient  contains  several  component  chemicals,  it  is

generally considered  that  it  is acceptable  to describe  the  ingredient on  the  label by  the name of  the

flavour, for example ‘strawberry flavour’. For confidentiality reasons companies may choose to describe

individual  ingredients used  in quantities below 0.1 per  cent.  of  the  final  formulation by  category,  for

example ‘other flavourings’.

This advice only applies to product labels, and a full list of ingredients in the flavouring must be included

in notifications through the EU-CEG.

Each  unit  packet  and  any  container  pack must  carry  a  health  warning  consisting  of  the  text:  “This

product  contains  nicotine  which  is  a  highly  addictive  substance”.  There  are  requirements  for  the

placement, size and type face of this warning.

Where all  the required  leaflet  information can fit on  the unit pack and other  labelling within  the pack

without loss of legibility to the consumer, general interpretation of the TPD is that the packaging can be

considered to include the leaflet, and a separate leaflet insert is not required.

Additional statutory labelling requirements may also apply, such as the European Regulation (EC) No

1272/2008 on classification, labelling and packaging of chemical substances (CLP).

If an e-cigarette product does not contain nicotine when sold, but can be used to contain nicotine, the

warning statement  ‘this product contains nicotine which is a highly addictive substance’ must still beapplied. To  provide  clarity  for  consumers,  it  is  recommended  that  adjacent wording  (not  part  of  the

boxed  warning)  to  the  effect  that  the  warning  applies  when  the  product  is  used  as  designed  and

charged/filled with nicotine-containing liquid. The warning statement should be included on all notified

e-cigarette products.

Product Presentation

In accordance with Regulation 38 of the TRP Regulations, the unit packet and any container pack of

the electronic cigarette or refill container may not include any element or feature set out below:

(a)      if it promotes an electronic cigarette or refill container, or encourages its consumption by creating

an erroneous impression about its characteristics, health effects, risks or emissions;

(b)      if it suggests that a particular electronic cigarette or refill container—

(i)       is less harmful than other electronic cigarettes or refill containers,

(ii)      has vitalising, energising, healing, rejuvenating, natural or organic properties, or

(iii)      has other health or lifestyle benefits;

(c)      if it refers to taste, smell or other additives (except flavourings) or the absence of any such thing;

(d)      if it resembles a food or a cosmetic product; or

(e)      if it suggests that a particular electronic cigarette or refill container has improved biodegradability

or other environmental advantages.

36

The unit pack or container pack in which an electronic cigarette or refill container is, or is intended to

be,  presented  for  retail  sale  may  not  contain  any  element  or  feature  which  suggests  economic

advantage by  including printed vouchers or offering discounts,  free distribution,  two-for-one or other

similar offers.

Annual Reporting Requirements

Regulation  32  of  the  TRP  Regulations  requires  that  a  producer  of  electronic  cigarettes  or  refill

containers must submit the following information to the Secretary of State on or before 20 May every

year:

(a)      comprehensive  data  on  the  producer’s  sales  volumes  in  the  United  Kingdom,  by  brand  and

variant name;

(b)      any  information  available  to  the  producer,  whether  published  or  not,  on  the  preferences  of

consumer groups  in  the United Kingdom,  including young people, non-smokers and  the main

types of current users;

(c)      the mode of sale of the producer’s products in the United Kingdom; and

(d)      executive summaries of any market surveys carried out by the producer in respect of paragraphs

(a) to (c) above.

Advertising and Sponsorship

There  are  restrictions  on  advertising  e  cigarettes.  In  accordance  with  Regulation  42  of  the  TRP

Regulations, no person may in the course of a business:

(a)      publish,  or  procure  the  publication  of,  an  electronic  cigarette  advertisement  in  a  newspaper,

periodical or magazine.

(b)      sell, offer for sale or otherwise make available to the public a newspaper, periodical or magazine

containing an electronic cigarette advertisement.

The above does not apply to:

(a)      a newspaper, periodical or magazine which is intended exclusively for professionals in the trade

of electronic cigarettes or refill containers; or

(b)      a newspaper, periodical or magazine which is printed and published in a third country and is not

principally intended for the European Union market.

Similarly no person may in the course of a business include, or procure the inclusion of, an electronic

cigarette  advertisement  in  an  information  society  service  (which  is  understood  to  be  any  service

normally provided for remuneration, at a distance, by means of electronic equipment for the processing

(including digital  compression) and storage of data, and at  the  individual  request of a  recipient of a

service) provided to a recipient in the United Kingdom and no service provider established in the United

Kingdom  may  in  the  course  of  a  business  include  an  electronic  cigarette  advertisement  in  an

information  society  service  provided  to  a  recipient  in  an EEA State  other  than  the United Kingdom

(“a non-UK-EEA-State”).

There  exceptions  to  the  above  to  an  information  society  service  which  is  intended  exclusively  for

professionals  in  the  trade  of  electronic  cigarettes  or  refill  containers;  or  to  an  electronic  cigarette

advertisement which is not principally intended for the EU market.

Equally, in accordance with Regulation 44 of the TRP Regulations, no person may in the course of a

business provide electronic cigarette sponsorship to:

(a)      an event or activity which takes place in or has an effect in two or more member States (“a cross-

border event or activity”); or

(b)      an individual taking part in a cross-border event or activity.

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For the purposes of the regulation “electronic cigarette sponsorship” means any form of public or private

contribution to any event, activity or individual, with the aim or direct or indirect effect of promoting an

electronic cigarette or refill container.

Cross Border Sales

There is a requirement to register a business if it supplies e-cigarette products via cross-border distance

sales, for example online sales.

This applies to:

•         businesses established in the UK selling e-cigarettes and / or refill containers to consumers in

another  EEA  state  (European  Economic  Area  –  the  27  EU  Member  States  plus  Iceland,

Liechtenstein and Norway); and

•         businesses  established  in  the  EEA  or  third  country  selling  to  UK  consumers.  Business  to

business sales, that is sales not direct to consumers, do not need to be registered.

Registration is a legal requirement under the TPD. Without confirmation of registration businesses must

not  supply  a  relevant  product  to  a  consumer  via  a  cross-border  distance  sale.  The UK  notification

requirement applies to products supplied to UK consumers via a cross-border sale.

Public Health England have uploaded a list of EEA Member States that have either confirmed they are

permitting cross-border distance sales of e-cigarettes and/or  tobacco products or are yet  to confirm

domestic  rules  in  this  area,  and a  list  of  registered  retailers. All  other Member States have banned

cross-border distance sales, and it would contravene the law to trade in those countries. Businesses

who intend to trade in countries where the sales confirmation, registration website or contact details are

yet to be confirmed are advised to contact the national authorities before commencing supply.

2. Other Significant Legislation and Regulation

The Nicotine Inhaling Products (Age of Sale and Proxy Purchasing) Regulations 2015

Regulation 3 of The Nicotine Inhaling Products (Age of Sale and Proxy Purchasing) Regulations 2015

provides that the sale of nicotine inhaling products to persons aged under 18 is prohibited.

General Product Safety Regulations 2005

The General  Product  Safety Regulations  2005  contain  obligations  on  producers  to  supply  products

which are safe.

Requirements include:

•         clear  labelling  which  must  include  clear  instructions  for  use  (the  consumer  must  be  able  to

understand  the  risks  together with how  they  can get  the best  possible  results  from using  the

product);

•         adopting  measures  to  assess  risks  and  take  appropriate  actions  (i.e.  sample  testing,

investigating complaints relating to safety and informing distributors of the monitoring of work and

results);

•         complying with the notification procedures to the local authority in the event a product is found to

be  dangerous  and  taking  the  appropriate  further  action  if  required  to  do  so  (i.e.  market

withdrawal, public warnings); and

•         making notifications in the prescribed format.

CE Marking

CE  marking  is  an  administrative  marking  that  indicates  conformity  with  health,  safety,  and

environmental  protection  standards  for  products  sold  within  the  European  Economic  Area.

Requirements include:

•         products need to be tested and certified that they comply with the CE regulations;

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•         those who manufacture modified electronic cigarettes hardware may self-certify to declare that

the produce will not interact with other products electromagnetically and USB chargers/batteries

are safe;

•         CE certificates and  testing  reports must bear model number which correspond  to  the product

(hardware not the e-liquid);

•         maintain a register of recalled products; and

•         keeping of technical information.

Restriction of Hazardous Substances in Electrical and Electronic Equipment Regulation 2012

Manufacturers,  Importers and Distributers of e-cigarettes also need to comply with  the Restriction of

Hazardous  Substances  in  Electrical  and  Electronic  Equipment  Regulation  2012  (known  as  RoHS).

These regulations limit the amount of certain hazardous substances in specific electrical equipment, of

which e-cigarettes are included. They place obligations onto Manufacturers, Importers and Distributers

of e-cigarette models. The regulation is enforced by the Office for Product Safety and Standards, part

of the Department for Business, Energy and Industrial Strategy.

The Communications Act 2003, Ofcom and Advertising Codes

Under section 368 of  the Communications Act 2003 advertising of electronic cigarettes or electronic

cigarette refill containers is prohibited in on-demand programme services. Similarly product placement

is prohibited in on-demand programme services if it is of electronic cigarettes or electronic cigarette refill

containers.

The  Ofcom  Broadcasting  Code  in  section  9  relating  to  Commercial  References  in  Television

Programming provides that the product placement of the following products, services or trademarks is

prohibited:

(a)      Cigarettes or other tobacco products;

(b)      Placement by or on behalf of an undertaking whose principal activity is the manufacturing or sale

of cigarettes or other tobacco products;

(c)      Prescription only medicines; or

(d)      Electronic cigarettes.

Similarly  Rule  9.16(a)  states  sponsored  programming  with  the  aim  or  direct  or  indirect  effect  of

promoting electronic cigarettes and/or refill containers is prohibited. There is an equivalent prohibition

in Rule 10.6 relating to radio.

The Ofcom On Demand Service Rules  provides  an On Demand Programme Service  (ODPS)  or  a

programme  included  in  an  ODPS  must  not  be  sponsored  for  the  purpose  of  promoting  electronic

cigarettes or electronic cigarette refill containers. There  is a similar rule for product placement which

states product placement is prohibited in ODPS if:

(a)      it is of cigarettes or other tobacco products;

(b)      it  is by or on behalf of an undertaking whose principal activity  is  the manufacturing or sale of

cigarettes or other tobacco products;

(c)      it is of prescription only medicines; or

(d)      it is of electronic cigarettes or refill containers.

There  are  also  restrictions  on  advertising  of  e  cigarettes  contained  in  The  UK  Code  of  Broadcast

Advertising  and  the  UK  Code  of  Non-Broadcast Advertising  and  Direct  and  Promotional  Marketing

which do not ban advertising of e cigarettes but place restrictions on such advertising.

39

PART III

RISK FACTORS

Investing in and holding Shares involves financial risk. Prospective investors in the Shares shouldcarefully review all the information contained in this document and should pay particular attention to thefollowing risks associated with an investment in the Shares, the Group’s business and the industry inwhich it participates.

The risks and uncertainties described in this Part III are not an exhaustive list and do not necessarilycomprise all, or explain all, of the risks associated with the Group and the industry in which it operatesor an investment in the Shares. They comprise all the material risks and uncertainties in this regard thatare currently known to the Company and the Board and should be used as guidance only. Additionalrisks and uncertainties relating to the Group and/or the Shares that are not currently known to theCompany and the Board, or which the Company and the Board currently deem immaterial, may ariseor become (individually or collectively) material in the future, and may have a material adverse effect onthe Group’s business, results of operations, financial condition and/or prospects. If any such risk orrisks should occur, the price of the Shares may decline, and investors could lose part or all theirinvestment. Prospective investors should consider carefully whether an investment in the Shares issuitable for them in the light of the information in this document and their personal circumstances.

GENERAL RISKS

An investment in the Company is only suitable for investors capable of evaluating the risks and merits

of  such  investment  and  who  have  sufficient  resources  to  bear  any  loss  that  may  result  from  the

investment. A prospective investor should consider with care whether an investment in the Company is

suitable  for  him or her  in  the  light  of  his or  her personal  circumstances and  the  financial  resources

available to him or her. The investment opportunity offered in this document may not be suitable for all

recipients of  this document.  Investors are  therefore strongly  recommended  to consult an  investment

adviser  authorised  under  FSMA,  or  such  other  similar  body  in  their  jurisdiction,  who  specialises  in

advising on investments of this nature before making their decision to invest.

Investment in the Company should not be regarded as short term in nature. There can be no guarantee

that  any  appreciation  in  the  value  of  the Company’s  investments  will  occur  or  that  the  commercial

objectives  of  the  Company  will  be  achieved.  Investors  may  not  get  back  the  full  amount  initially

invested. The prices of shares and  the  income derived  from  them can go down as well as up. Past

performance is not necessarily a guide to future performance.

Any economic downturn either globally or locally in any area in which the Group operates may have an

adverse effect on demand for the Group’s products. A more prolonged downturn may lead to an overall

decline in sales. Economic uncertainty might have an adverse impact on the Group’s operations and

business results.

RISKS RELATING TO THE BUSINESS AND OPERATIONS OF THE GROUP

Dependence on customers

In  the  year ended 31 March 2020,  the Group derived over 50 per  cent.  of  its  sales  from  its  top 10

customers and the loss of, or a significant reduction in, sales to any of these customers could materially

and adversely affect the Group’s business, financial conditions and results of operations.

Notwithstanding  the  Group’s  long-term  business  relationships  with  major  customers,  there  is  no

guarantee that their actual demands can be accurately forecast. Whilst business and future expansion

plans are based on an estimation of the demands from the market and customers, actual demands may

fall short of estimation, due to, inter alia, changes in customers’ business models, strategies or financialconditions, changes in local policies or market conditions and economic development. In addition, any

adverse  changes  in  the  Group’s  relationships  with  major  customers  or  in  the  key  commercial

arrangements with  them, such as purchase price,  could materially and adversely affect  the Group’s

business, financial conditions and results of operations.

40

The Group’s customers are not contractually committed to purchase the Group’s products on a  long

term basis and may cease to buy or reduce their purchases of the Group’s products at any time. Were

a material number of customers to cease to buy or reduce their purchases of the Group’s products, and

those  customers  and  their  former  levels  of  purchases  were  not  replaced  with  new  customers  or

increased purchasing by existing customers, then this could materially and adversely affect the Group’s

business, revenue, financial condition, profitability, results, prospects and/or future operations.

Dependence on key executives and personnel

The Group’s  future development  and prospects depends  to a  significant  degree on  the experience,

performance and continued service of its senior management team including the Board. Supreme has

invested  in  its  management  team  at  all  levels  and  believes  that  the  senior  management  team  is

appropriately structured for the Group’s size. Supreme has also entered into contractual arrangements

with these individuals with the aim of securing the services of each of them. However, retention of these

services or the identification of suitable replacements cannot be guaranteed. The loss of the services

of  any  of  the Board  or  other members  of  the  senior management  team and  the  costs  of  recruiting

replacements may have a material adverse effect on the Group’s business, revenue, financial condition,

profitability, results, prospects and/or future operations.

Existing Shareholder influence

Following Admission,  the  aggregate  beneficial  interest  in  the  Company  of  Sandy  Chadha  and  his

Concert Party will amount to 66,126,845 Shares, being 56.76 per cent. of the Enlarged Share Capital.

Accordingly,  Sandy  Chadha  will  be  in  a  position  to  have  significant  influence  over  the  Company’s

operations and business strategy and all matters requiring shareholder approval, including the election

and  removal  of Directors,  further  issues  of  shares,  approval  of  dividends  and  share  buybacks. The

Company  has  entered  into  a  relationship  agreement  with  Sandy  Chadha in  order  to  regulate  the

ongoing  relationship  between  the  Company  and  Sandy  Chadha,  and  which  contains  a  number  of

undertakings  as  to  how  Sandy  Chadha may  exercise  his  voting  rights  in  relation  to  the  Company.

Further information in relation to this relationship agreement is set out in paragraph 8 of Part IX of this

document.

Existing and new licensing agreements

The Group may not be able to renew its existing licence agreements and may not be able to negotiate

new  agreements  in  the  future.  The  Group’s  inability  to  obtain  renewed  licensing  agreements  or

comparable terms could have an adverse effect on the Group’s business, financial condition and future

operations.

Supreme operates in a competitive environment

The Group operates in a highly competitive market in each of its product categories. Where an existing

competitor or new entrant is successful in providing products of a similar or better branding recognition

and/or capability and/or quality and/or price to the Group, particularly in product lines where the Group

has  a  strong market  position,  this  could  cause  a  decline  in  the  Group’s  activity  levels  or  margins,

resulting in a negative impact on the Group’s revenue and profitability.

In particular:

(i)       in batteries, exchange rate fluctuations may enable the sourcing of products which are the same

as the Group’s from other countries for a sterling cost that is less than the Group’s and thereby

may enable the Group’s cost to its customers to be undercut;

(ii)      in lighting products, a competitor may obtain a licence to produce products using an established

brand which may be considered more attractive than those available to the Group;

(iii)      in  vaping,  other manufacturers  or  suppliers  of  e-liquids may  introduce  flavours  that  are more

attractive to customers than those of the Group or methods, systems and trends in vaping may

alter (e.g. the market has moved from closed to open systems and other changes may occur) or

global tobacco companies may target the Group’s retail customers; and

41

(iv)     in  sports  nutrition  &  wellness,  the  market  is  growing  and  highly  fragmented  meaning  other

manufacturers  or  suppliers  may  enter  the  market  and  existing  suppliers  may  introduce  new

products or build more brand awareness via advertising.

There can be no assurance that in the future the Group will be able to compete successfully against its

current or future competitors or that the competitive pressures it faces will not result in reduced revenue,

profitability or market share. Any reduction in the Group’s revenue or market share due to  increased

competition  could  have  a material  adverse  effect  on  the Group’s  result  of  the  operations,  financial

condition or future prospects.

Brand image and reputation

The  Group’s  financial  performance  is  influenced  by  the  image,  perception  and  recognition  of  the

Duracell,  Energizer,  Panasonic  and  JCB  brands,  which,  in  turn,  depend  on  many  factors  such  as

product design,  the distinctive character and quality of  their products,  their  communication activities

including  marketing,  social  media,  public  relations  and  commercial  partnerships  and  their  general

corporate  and  market  profile  (which  is  influenced  by  factors  such  as  product  sourcing  ethics  and

corporate social responsibility activities).

The Board believes that the reputation and the quality of the Duracell, Energizer, Panasonic and JCB

brands has played an important role in the success of the batteries and lighting business of the Group

and  that  this  will  continue  to  be  the  case  in  future.  Therefore  any  incident  that  negatively  affects

customer loyalty towards any of the Duracell, Energizer, Panasonic and JCB brands could materially

adversely  affect  the  Group’s  business,  revenue,  financial  condition,  profitability,  results,  prospects

and/or future operations.

The Group’s brands may be negatively affected by any negative publicity,  regardless of accuracy or

provenance. This  includes  any  negative  commentary  on  social media  platforms,  including weblogs,

social media websites and other forms of internet based communications that provide individuals with

access to a broad audience of consumers and other interested parties.

Growth depends on customers success in selling products

Most of the Group’s revenue is generated from sales to wholesalers and retailers albeit a proportion of

sales  are  made  direct  online  to  consumers.  The  Group’s  business  performance  largely  relies  on

customers’ ability to market and sell products manufactured or supplied by Supreme. Customers sales

and marketing efforts and strategies are not within the control of Supreme, and any material changes

to  their sales and marketing strategies may  in  turn adversely  impact  the Group’s business,  financial

conditions and results of operations.

Brexit risk

The UK’s decision to leave the EU has resulted in considerable uncertainty regarding both the terms

under which the UK withdraws from, and continues to trade long-term with, the EU. In the financial year

ended 31 March 2020, less than 10 per cent. of the Group’s purchases originated in the EU and less

than 10 per cent. of the Group’s sales were to customers in the EU. The Group considers the following

to be relevant when considering the Brexit risk:

•         Supreme’s EU customers may perceive the Group to be less competitive on price than prior to

Brexit  due  to  a  fluctuation  in  the  exchange  rate  between  the  pound and  the Euro  and/or  the

introduction of taxes and,  if  the UK diverges  from existing arrangements with  the EU,  trading

tariffs imposed on UK-to-EU purchases and sales;

•         More widely, there may be other pricing changes from worldwide suppliers arising as a result of

tariff or import taxes or VAT or other tax or tax like changes following Brexit. Any such changes

could impact costs of all products and raw materials and therefore impact competitiveness of all

products which the group sells, not just direct trade with the EU;

•         Regulation  of  the  vaping  market  is  currently  largely  regulated  by  TPD.  Whilst  there  is  no

expectation  and  no  indication  that  this may  adversely  change  in  the  short  term  the UK may

choose to diverge from EU based regulation following Brexit;

42

•         The Group’s plans to expand into other EU countries may be affected by the terms of Brexit and

in particular the cost of dealing with any customs requirements of exporting to the EU, if the UK

does not maintain  a  treaty  for  frictionless  trade with  the EU  in  the  future  that would  apply  to

vaping products; and

•         In addition to the longer term ability of Supreme to trade competitively with the EU, there is also

the short term risk of delays in purchasing from (and shipping to) the EU shortly after 1 January

2021 when  the UK  initially  leaves  the EU where delays may be  incurred as carriers adjust  to

changes in Customs and Clearing regulations.

Despite thoroughly considering any possible negative impact of the UK’s decision to leave the EU on

Supreme, it is not possible to predict fully the effects the decision to leave may have on the Company

or the wider economy in the long term. The Board have considered all factors they believe, at this time,

could have a material adverse effect on the Group’s business, revenue, financial condition, profitability,

results, prospects and/or future operations.

Health and Safety

The  Group  engages  in  manufacturing,  packaging,  storage  and  transportation  of  products  and  the

preservation  of  the  health and safety  of  its  staff,  site  visitors  and  consumers  is  of  over-arching

importance to Supreme. Whilst there are processes and procedures to monitor and ultimately mitigate

the risk, the Group has identified the following risks of a health and safety nature which it is exposed

to:

Batteries

A battery is an electrochemical cell. The Group stores in its warehouses and transports batteries which

might, if damaged or past their sell by date, be hazardous to human health by leaking chemicals.

Lighting

Light bulbs and/or light fittings may contain hazardous chemicals which if released may be hazardous

to human health. The Group stores in its warehouses and transports light bulbs and light fittings which

may, if shattered or broken, cause injury.

Vaping

The Group creates, tests and manufactures e-liquids and consequently has stores of chemicals such

as  propylene  glycol,  vegetable  glycerine,  nicotine  and  flavourings.  Some  of  these  chemicals  are

flammable  or  corrosive  and/or  hazardous  to  human  health  if  they  leak  or  are  mixed  in  improper

quantities or proportions or at all. The Group’s blending and production activities use a clean air system

which  if  damaged  might  expose  personnel  to  hazardous  chemicals. Hardware  for  vaping  includes

batteries which might, if damaged or past their sell by date, leak chemicals.

Sports Nutrition & Wellness

The Group operates a protein powder blending and production facility which could release powder into

the air and expose persons to hazardous powders. Similarly, the Group repacks bulk vitamin products

for  retail  consumption  and  operates  an  onsite  vitamin  production  facility  blending  product  from  raw

materials which could release powder into the air and expose persons to hazardous powders.

Branded Household Consumer Goods

The Group sells a range of household products (e.g. bleach) which can be hazardous to human health

if ingested or if their packaging is damaged or the products are otherwise released in an uncontrolled

manner (e.g. matches or aerosols).

Manufacturing and Packaging

The manufacture and packaging of products entails the use of machinery which if operated improperly

or  fitted  improperly  or  if  otherwise  damaged  or malfunctioning  can  be  dangerous  and  could  cause

damage to human health. The Group has protocols in place to mitigate these risks but cannot eliminate

them entirely. In particular an accident has occurred, further details of which are set out in paragraph

43

15  of  Part  IX,  resulting  in  personal  injury  to  a  contract worker. Any  such  accident may  give  rise  to

damages to any such worker and action from the Health and Safety Executive which may include fines.

Distribution and Warehousing

Warehouses tend to  involve the mix of people and machinery (e.g. fork  lift  trucks) which can lead to

injuries  and/or  damage  from  time  to  time.  They  also  have  stocks  of  products  (whether  on  racking,

pallets or otherwise) which if dropped or otherwise come loose may injure persons in the warehouse

and/or damage the products themselves. Whilst the Group has protocols in place to mitigate these risks

it cannot eliminate them entirely.

Similarity  the  distribution  of  products  may  involve  the  delivery  and/or  distribution  and/or  unloading

and/or loading of products by heavy goods vehicles which are capable of injuring persons or damaging

the products themselves.

COVID-19

Current circumstances require personnel to stay apart to mitigate the risk of infection from COVID-19

being  passed  amongst  employees  thus  causing  disruption  to  production  caused  by  widespread

employee  absences.  The Group  has  protocols  in  place  to mitigate  this  risk  but  cannot  eliminate  it

entirely.

General

A violation of health and safety  laws or  regulations  relating  to  the Group’s operations or a  failure  to

comply with the instructions of the relevant health and safety authorities could lead to, amongst other

things, negative publicity and reputational damage, fines, costly compliance procedures and, in extreme

circumstances,  a  temporary  shutdown of  all  or  part  of  the Group’s  business. Such  violations  could,

therefore, have a material adverse effect on  the Group’s business,  financial condition and  results of

operations.

Damage to the Group’s manufacturing facility, distribution centre or disruption to its distributionnetworks

The  Group  manufactures,  distributes  and  retains  stocks  of  e-liquids  and  protein  powders  at  its

distribution centre located in Trafford Park, Manchester and is dependent on the distribution of e-liquids,

protein  powders  and  other  products  to  and  from  this  central  distribution  centre.  As  the Supreme

business expands, it may also need to develop and implement other distribution centres to expand its

network  both  for  capacity  and  geographical  reach. A  fire,  damage  ability  to  access  the  site  for  any

reason,  or  other  issue  preventing  the  normal  running  of  the  Group’s  manufacturing  facility  and/or

distribution centre or the operations of its logistics partners could significantly hinder the Group and may

prevent  or  delay  the  manufacture  and/or  distribution  of Supreme’s  products  (both  to  the  Group’s

distribution centre and from the distribution centre to customers).

A material or prolonged disruption to Supreme’s logistics and distribution networks (including road, rail,

air and shipping networks) could also have the same effect. A disruption to the Group’s logistics and

distribution networks could arise for a number of reasons,  including a failure to expand  logistics and

distribution processes or capacity,  inclement weather,  labour unrest, political or diplomatic events or

circumstances, acts (or threatened acts) of terrorism, failures on the part of logistics partners and other

events which may be outside of the control of the Group.

Dependent on  the severity of  the  issue concerned and regardless of  the proceeds of any  insurance

policy which may  be  available,  a material  interruption  to Supreme’s  ability  to  receive  and  distribute

products  to  its  customers  could  have  a material  adverse  effect  on  the Group’s  business,  revenue,

financial condition, profitability, results, prospects and/or future operations and reputation.

Material disruption in IT systems

Supreme relies to a significant degree on its IT systems to track inventory, manage its supply chain,

record and process transactions, summarise results and manage its business. The failure of Supreme’s

IT systems to operate effectively, even for a short period of time, could adversely affect its business,

revenue,  financial  condition,  profitability,  results,  prospects  and/or  future  operations.  In  particular,

should it be required as the business expands, the implementation of new IT systems could take longer

44

than expected, disrupt Supreme’s current systems and/or incur cost overruns. In addition, the Group’s

IT  systems  may  be  subject  to  damage  and/or  interruption  from:  natural  disasters;  power  outages;

computer, network and telecommunications failures; computer viruses; security breaches; acts of war

or  terrorism; and usage errors by  its employees.  If Supreme’s  IT systems are damaged or cease  to

function properly, it may have to make a significant investment to fix or replace them, and it may suffer

loss of critical data and interruptions or delays in its operations. Any significant disruption in the Group’s

IT systems could harm its operations and reputation, and have a material adverse effect on its business,

revenue, financial condition, profitability, results, prospects and/or future operations.

Notwithstanding investment in its IT systems, no business or other organisation is immune to hacking

and cyberattacks, and accordingly future breaches of cyber security could harm Supreme’s operations

and/or  reputation,  and  have  a material  adverse  effect  on  its  business,  revenue,  financial  condition,

profitability, results, prospects and/or future operations.

The warehouse management system which is used to operate the Group’s distribution centre located

in Trafford Park, Manchester is considered to be a business critical system. From a disaster recovery

planning perspective, in the event the IT system fails or is unavailable for a period of time the Group

has  a  manual  operation  contingency  plan  which  in  the  short  term  would  allow  it  to  operate  the

distribution centre and its processing and despatch system manually and fulfil the stock needs of retail

stores, wholesale customers and other customers, although the manual operating system contingency

would  not  be  as  efficient  as  the  warehouse  management  IT  system.  The  failure  of Supreme’s

warehouse  management  IT  system  to  operate  effectively,  even  for  a  short  period  of  time,  could

adversely affect its business, revenue, financial condition, profitability, results, prospects and/or future

operations.

Protection of the Group’s intellectual property

The commercial success of the Group depends in part on its ability to protect its intellectual property

rights and to preserve the confidentiality of its own know-how and business information. Supreme relies

upon  various  intellectual  property  protections,  including  copyright  and  contractual  provisions,  to

preserve its intellectual property rights and protect confidentiality. No assurance is given that the Group

will be able to protect and preserve its intellectual property rights or the confidentiality of its own know-

how or to exclude competitors with similar products.

Substantial costs may be incurred if Supreme is required to defend its intellectual property rights against

third parties. Other parties may copy without authorisation the Group’s intellectual property. Supreme

may not be able effectively  to detect and prevent any  infringement of  its  intellectual property  rights.

Policing  unauthorised  use  of  intellectual  property  is  difficult,  and  some  foreign  laws  do  not  protect

proprietary rights to the same extent as the laws of the UK. To protect the Group’s intellectual property,

Supreme may  become  involved  in  litigation,  which,  even  if  successful  could  result  in  substantial

expense, divert the attention of management, cause significant delays, materially disrupt the conduct of

the Group’s business or adversely affect its business, revenue, financial condition, profitability, results,

prospects  and/or  future  operations.  In  any  event,  the  Group’s  intellectual  property  rights  may  not

provide sufficiently meaningful commercial protection for its products or trademarks.

Third party intellectual property rights

While  the Board believes  that Supreme’s products and  its  intellectual property  rights do not  infringe

upon the proprietary rights of third parties, there can be no assurance that the Group will not receive

communications  from  third  parties  asserting  that Supreme’s  products  (some  of which  are  designed

and/or manufactured by third parties) and its intellectual property rights infringe, or may infringe, their

proprietary  rights. Any  such  claims, with  or without merit,  could  be  time  consuming,  result  in  costly

litigation and  the diversion of management personnel, cause product delays or  require  the Group  to

develop or otherwise seek the supply of non-infringing products or intellectual property rights or enter

into  royalty  or  licensing  agreements  or  re-brand  products.  Such  royalty  or  licensing  agreements,  if

required, may not be available on terms acceptable to Supreme or at all. In the event of a successful

claim of infringement against the Group or the Group’s suppliers and any failure or inability to develop

or  source  or  licence  non-infringing  products  or  intellectual  property  rights,  the  Group’s  business,

revenue, financial condition, profitability, results, prospects and/or future operations could be materially

adversely affected. Reference is made to the potential claim by Philips in paragraph 14 of Part IX of this

document.

45

Achievement of strategic aims

The  value  of  an  investment  in  Shares  is  dependent  on Supreme achieving  its  strategic  aims.  The

Group’s strategy is outlined in Part I of this document. While the Board is optimistic about the prospects

for  the Group,  there  is no certainty  that  it will be capable of achieving  its strategy or  the anticipated

revenues, profitability or growth. The Group’s  future operating  results will be highly dependent upon

how well  it manages  its planned expansion strategy and  the  timeframe within which  that strategy  is

executed.

Ability to recruit and retain skilled personnel

The  Board  believes  the  Group  operates  a  progressive  and  competitive  remuneration  policy  which

includes share  incentives and  this will allow Supreme to continue  to attract and  retain  the calibre of

employees necessary  to ensure  the efficient management and development of  the Group. However,

any difficulties encountered  in hiring appropriate employees and  the  failure  to do so, or a change  in

market conditions that renders current incentivisation structures lacking, may have a detrimental effect

upon  the Group’s business,  revenue,  financial condition, profitability,  results, prospects and/or  future

operations. The ability  to attract new employees with  the appropriate expertise and skills cannot be

guaranteed.

Financial controls and internal reporting procedures

The Group has financial  reporting systems and controls  in place to allow  it  to produce accurate and

timely financial statements and to monitor and manage risks, including the risk of fraud (committed by

employees, customers, suppliers etc). If any of these systems or controls were to fail Supreme may be

unable to produce financial statements accurately or on a timely basis and/or it may expose the Group

to  risk. Any  concerns  investors may  have  over  the  potential  lack  of  available  and  current  financial

information and the controls the Group has in place could adversely affect the Company’s share price.

Counterparty risk

There is a risk that parties with whom the Group trades or has other business relationships (including

partners, customers, suppliers, subcontractors and other parties) may become insolvent or may a party

to or a victim of a VAT fraud. This may be as a result of general economic conditions or factors specific

to that party or by inadequate checks being made on a counterparty’s supply chain. In the event that a

party with whom the Group trades becomes insolvent or is a party to or a victim of a VAT fraud, this

could have an adverse impact on the Group’s business, revenue, financial condition, profitability,  tax

recoverability, results, reputation, prospects and/or future operations. This risk may be higher where the

counterparty is located or registered outside the United Kingdom, as the costs of enforcing the Group’s

rights to payment or performance may be higher than would be the case in the United Kingdom, or the

local  legal  system  may  not  function  in  a  manner  which  is  conducive  to  expeditious  recovery  or

enforcement. The Board seeks to mitigate these risks through, for example, carrying out credit checks

on new business customers or business partners and requiring certain customers or business partners

to put in place letters of credit or similar payment guarantee arrangements before extending them more

than an appropriate level of credit.

COVID-19

The  outbreak  of COVID-19 has  negatively  impacted  economic  conditions  globally  and  continues  to

have an adverse and disruptive effect on the UK economy. To date the Company has adapted to the

challenges the pandemic has presented and is likely to need to continue to remain agile and adapt over

the coming months in response to any further developments relating to the COVID-19 outbreak.

If  the COVID-19  pandemic  continues  for  a  prolonged  period  of  time,  this may  result  in  operational

challenges, delays in receiving payments from clients and may impact the Company’s ability to secure

new  business.  The  COVID-19  pandemic  may  therefore  have  an  adverse  effect  on  the  Company’s

business, cash flows, profitability, results of operation and financial condition.

Exchange rate risk

Due to the  international nature of  its business,  the Group  is exposed to changes  in  foreign currency

rates. Supreme’s  functional currency used  in  its  financial statements  is Pounds Sterling. However,  it

conducts and will continue to conduct transactions in currencies other than Pounds Sterling, including

46

the Euro and US Dollar. The Group sets the sales prices for its products at periodic fixed intervals. If

there is a significant weakening of the exchange rate between the local currency in which the revenue

is generated prior to the sale and subsequent to its fixing of prices, then its expected margins may be

reduced.  Although Supreme seeks  to  manage  its  foreign  currency  risks  in  order  to  minimise  any

negative  effects  caused  by  exchange  rate  fluctuations,  including  by  engaging  in  foreign  exchange

hedging transactions, there can be no assurance it will be able to do so successfully, and fluctuations

in exchange  rates could have a material adverse effect on  the Group’s business,  revenue,  financial

condition, profitability, results, prospects and/or future operations.

Dependence on economic conditions and consumer confidence

Many factors affect the level of consumer spending in any particular jurisdiction, including the state of

the economy as a whole, stock market performance, interest rates, currency exchange rates, recession,

inflation or deflation, political uncertainty,  the availability of consumer credit,  taxation, unemployment

and other matters that influence consumer confidence and/or levels of disposable income. All of these

are outside the Group’s control. A decline in general economic conditions may lead to either delayed or

failed payments by customers or customers entering into insolvency processes such as administration,

putting pressure on Supreme’s own liquidity. The Group distributes its products internationally and may

be affected by  the same  factors  in some or all of  these markets at any particular  time. A significant

decline  in  the UK and/or  global  economy and/or  in  consumers’  confidence or  liquidity  could have a

material  adverse  effect  on Supreme’s  business,  revenue,  financial  condition,  profitability,  results,

prospects and/or future operations.

Expansion into new jurisdictions

As part of its growth strategy, the Group intends to explore opportunities in markets outside the UK. Any

expansion into new markets would expose Supreme to a variety of risks including: different regulatory

requirements;  compliance  with  international  trading  rules  including  sanctions  regimes;  different

customer preferences; managing foreign operations; exchange rate risk; new or enhanced exposure to

local  economies and consumer  confidence;  and  the potential  for  higher  rates of  fraud. Equally,  any

expansion into a new territory may not be successful if the Group is not able to achieve a sufficiently

strong brand image, perception and/or recognition in any particular territory. Successful entry into new

jurisdictions will also depend on Supreme’s ability  to  identify and engage appropriately with  the right

retailers,  logistics  providers  and/or  wholesale  partners.  The  Group  may  be  unable  to  identify  and

engage with the right retailers, logistics providers and/or wholesale partners to facilitate expansion into

new jurisdictions. Supreme may expend resource on expansion into a territory which ultimately either

proves  to  be  unsuccessful  or  takes  a  much  longer  period  than  anticipated  to  become  successful.

Failures and/or delays in successfully launching into new territories may have a material adverse effect

on  the  Group’s  business,  revenue,  financial  condition,  profitability,  results,  prospects  and/or  future

operations.

Third party production and supply

The Group outsources the production of some of its products to external manufacturers with appropriate

expertise  and  capacity.  A  significant  proportion  of Supreme’s  battery  and  lighting  products  are

manufactured in China. Similarly, a significant proportion of Supreme’s batteries are manufactured for

the relevant brand either by or on behalf of that brand. In addition, the Group does not have long term

supply  agreements  with  its  third-party  manufacturers  and/or  suppliers.  The  inability  of  third-party

manufacturers  to  produce  and  dispatch  orders  in  a  timely  and  appropriate manner,  to  the  required

quality, or to comply with their obligations or other laws and regulations could have a negative impact

on Supreme’s operations and business. Likewise, any supplier failure or any decision by a supplier not

to accept some or any orders from the Group could have a negative impact on Supreme’s operations

and business. Similarly, if Supreme expands beyond the production capacity of its current suppliers, it

may not be able to find new suppliers with an appropriate  level of expertise and capacity  in a timely

manner. If any of these risks were to develop, it could have a material adverse effect on the Group’s

business, revenue, financial condition, profitability, results, prospects and/or future operations.

Product Liability

The Group may be liable under the Consumer Protection Act 1987 or by contract for defective products

imported  or  otherwise  supplied  by  the  Group  but  which  the  Group  has  not  manufactured  and/or

designed. The Group may not be able to obtain reimbursement or any contribution to any liability for of

any  claim  in  respect  of  such  defective  products  whether  the  agreements  with  such  suppliers  or

47

manufacturers provide for any such reimbursement or not. Similarly, the Group may be liable under the

Consumer Protection Act 1987 or by contract or  in negligence for defective products supplied by the

Group which  the  group  has manufactured  and/or  designed. Whilst  the Company maintains  product

liability insurance such policies contain exclusions and limitations and excesses. A substantial claim for

loss of  assets or  loss of  production which was not  covered by  the Group’s  insurance could have a

material adverse effect on the Group’s financial results.

The  sale  of  goods  to  consumers  is  subject  to  the  Sale  of  Goods Act  1979  (the  “SGA”)  and  otherconsumer rights legislation. Pursuant to the SGA, the Group may be held liable for the cost of repairing

or replacing any goods that the Group sells which do not meet the express terms of the contract for sale

or the implied terms of satisfactory quality, fitness for purpose or correspondence with description. Any

claims that a customer may have against the manufacturer of the goods or under a warranty sold by

the manufacturer or a third party are in addition to the rights that the customer has against the seller

under the SGA. Accordingly, a customer who has purchased goods from the Group that allegedly does

not meet an express or implied contractual term may choose to bring a claim against the Group as the

seller of  the goods and,  in particular, customers may choose to bring such a claim in circumstances

where the manufacturer has entered administration or become insolvent or is overseas.

Changes in input and raw material prices

The  Group’s  manufacturing  suppliers  purchase  substantial  amounts  of  raw  materials  for  use  in

manufacturing Supreme’s products. The price of these raw materials has a direct impact on the price

the Group pays its manufacturers for its products. The price and availability of certain raw materials has

fluctuated  in  the  past,  and  may  fluctuate  in  the  future,  depending  on  a  variety  of  factors,  supply

conditions, government regulation, war, terrorism, labour unrest, the economic climate, exchange rates,

global  demand  for  raw  materials  and  other  unpredictable  factors.  Additionally,  costs  of  third  party

providers for Supreme’s transportation costs may increase. Any increase in the price of raw materials

or Supreme’s  transportation  costs  could  cause delays  in  product  deliveries,  affect  the availability  of

Supreme’s products and/or  increase  the cost of Supreme’s products, some or all of which Supreme

may not be able to pass on to its customers and so profitability could be impacted. All of the foregoing

factors  could  have  a material  adverse  effect  on  the Group’s  business,  revenue,  financial  condition,

profitability, results, prospects and/or future operations.

Dependence on suppliers

The Group’s suppliers are not contractually committed to sell their products to the Group on a long term

basis and may cease to sell or reduce their sales to the Group of their products at any time. Were a

material number of suppliers, and in particular suppliers of branded products, to cease to sell or reduce

their sales to the Group of their products, and those suppliers and their former levels of sales were not

replaced with new suppliers or  increased sales by existing  suppliers,  then  this  could materially  and

adversely  affect  the  Group’s  business,  revenue,  financial  condition,  profitability,  results,  prospects

and/or future operations.

Battery and lighting products are principally manufactured and/or sourced in markets outside of the UK,

e.g. in China. There are a variety of risks generally associated with doing business in foreign markets

and  importing  items  from such  regions,  including  delays  associated with  customs procedures,  risks

related to  labour practices and supply chain ethics, heightened anti-bribery and corruption concerns,

quality  assurance  concerns,  environmental  risks,  risks  of  transportation  of  products  by  sea  and

imposition of  taxes. Any of  these  risks and/or any  failure  to supply more generally could  restrict  the

availability  of  products  and/or  increase  the  costs  of Supreme’s  products  and/or  change  consumers’

perceptions  about  the  quality  of  its  products  and  could  have  a material  and  adverse  effect  on  the

Group’s business, revenue, financial condition, profitability, results, prospects and/or future operations.

The  Group  purchases  from  its  suppliers  certain  cannabidiol  products.  The  Group  relies  on  those

suppliers  to  ensure  that  cannabidiol  concentrations  of  Tetrahydrocannabinol  are  kept  below  one

milligram per component part of the product. Whilst the Group conducts tests on batches of products

there is a risk if this concentration is exceeded that the Group may be committing an offence under the

Misuse of Drugs Regulations 2001.

48

Commercial contracts

Members of the Group have engaged and will continue to engage with suppliers and customers with

more  negotiating  leverage  than  is  available  to Supreme.  Such  parties  may  be  suppliers  of  goods,

services, utilities or operational systems and the software used by the Group to operate its business.

The standard commercial terms of such entities may not be subject to negotiation and the Group may

be required to tolerate terms which are less favourable than might be anticipated or preferred. If for any

reason a member of  the Group comes to breach such terms,  the financial and operational penalties

could  be  severe  and  have  a  material  adverse  impact  on  the  Group’s  business,  revenue,  financial

condition, profitability, results, prospects and/or future operations. Similarly, the terms of such contracts

may  restrict  the  Group’s  ability  to  fully  recover  loss  and  damage  arising  from  breaches  by  such

counterparty or restrict the range of sanctions (including termination rights) available to the Group. As

the  Group  has  grown  in  size  and  sophistication  it  has  continued  to  develop  its  processes  and

procedures for the review and negotiation of commercial contracts. The Board intends to continue to

monitor  this  area  of  the  business  and  further  develop  these  processes  and  procedures  in  order  to

ensure  that  so  far  as  possible  the  Group is able  to  achieve  a  favourable  outcome  in  relation  to

contractual negotiations including to trade on the Group’s own terms and conditions where possible.

Where necessary or advisable the Board will invest in the Group’s commercial contracting processes

and procedures for this purpose. This may result in the Group being required to incur additional costs,

which could have an adverse effect on the returns available on an investment in the Company.

The Group engages with its principal suppliers and customers either on those suppliers’ or customers’

terms and conditions or, where the Group’s own terms and conditions are not accepted, without any

formalised arrangements. As a  result,  there  can be no guarantee  that  orders  from suppliers will  be

accepted. Further, the Group has limited visibility on the standard terms of its suppliers and customers

which may contain provisions unfavourable to the Group such as seeking to exclude liability or restrict

remedies  for  breach  of  contract  or  may  impose  onerous  obligations  on  the  Group  or  may  include

indemnities,  provided  by  the  Group,  sometimes  on  an  uncapped  basis.  Such  provisions  create  an

inherent risk that any liability on the Group’s part under a supplier or customer’s terms and conditions

could be material. A successful claim under such an indemnity may have a significant  impact on the

Group’s profitability. The suppliers’ or customers’  location may also mean  that English  law does not

apply.

Certain  commercial  contracts  to  which members  of  the Group  are  party  entitle  the  counterparty  to

terminate such agreements upon a change of control. Whilst Admission will not result in a change of

control of the business, subsequent issues of Shares could result in a change of control occurring. The

Board has identified those contracts which it believes are material to the business and operations of the

Group  and  will  after Admission  seek  confirmation  from  the  counterparty  that  it  does  not  intend  to

exercise any such termination right.

Insurance risk

There  can  be  no  certainty  that  the  Group’s  insurance  cover  is  adequate  to  protect  against  every

eventuality. The occurrence of an event  for which the Group did not have adequate  insurance cover

could  have  a  materially  adverse  effect  on  the  Group’s  business,  revenue,  financial  condition,

profitability, results, prospects and/or future operations.

Estimates in financial statements

Preparation of consolidated financial statements requires the Group to use estimates and assumptions.

Accounting  for  estimates  requires management  to  use  its  judgment  to  determine  the  amount  to  be

recorded  on  its  financial  statements  in  connection  with  these  estimates.  The  Group’s  accounting

policies  require  management  to  make  certain  estimates  and  assumptions  as  to  future  events  and

circumstances. In addition, the carrying amounts of certain assets and liabilities are often determined

based on estimates and assumptions of future events. If the estimates and assumptions are inaccurate,

Supreme could be required to write down the value of certain assets. On an ongoing basis, the Group

re-evaluates  its  estimates  and  assumptions.  However,  the  actual  amounts  could  differ  from  those

estimates and assumptions.

49

REGULATORY, TAX AND LEGAL RISKS

Regulatory risks

As the Group has grown in size and sophistication it has continued to develop its risk management and

compliance procedures in conjunction with its advisers in order to ensure its compliance with current

legislation,  regulation,  rules and practices and  the Board’s  interpretation  thereof. Such  interpretation

may  not  be  correct  and  legislation,  regulation,  rules  and  practice  may  change,  possibly  with

retrospective  effect. Any  such  changes may  require  the Group’s  risk management  and  compliance

procedures to be amended and require investment in ensuring ongoing legal compliance.

The Board monitors the Group’s risk management and compliance procedures and will continue to do

so following Admission. Where necessary or advisable it will invest in the Group’s risk management and

compliance  procedures  in  order  to  ensure  ongoing  legal  compliance.  Any  change  in  legislation,

regulation, rules, or practice may result in the Group being required to incur additional costs, as would

further investment in the Group’s risk management and compliance procedures. Each of these could

have an adverse effect on the returns available on an investment in the Company.

Risks relating to taxation, import duties and changes in legislation

This document has been prepared on the basis of current  legislation, regulation, rules and practices

and  the  Board’s  interpretation  thereof.  Such  interpretation  may  not  be  correct  and  legislation,

regulation,  rules  and  practice  may  change,  possibly  with  retrospective  effect.  Anti-dumping  duties

(which in the EU may be imposed if it is concluded that products are being sold at below their normal

market value or are otherwise subsidised)  imposed by  the EU, or  the UK on products sourced  from

overseas  countries  may  have  an  adverse  effect  on  the  returns  available  on  an  investment  in  the

Company. Equally any change in legislation, regulation, rules, or practice, any change to the existing

mechanisms  relating  to or duties payable on  the  importation of products and  in particular  in  the  tax

status  or  tax  residence  of  the Group  or  the  Company, may  have  an  adverse  effect  on  the  returns

available on an investment in the Company

Legal risks

Legal  risks  include an absence of  adequate protection  for  intellectual  property  rights,  an  inability  to

enforce foreign judgments relating to contracts entered into by the Group, absence of a choice of law,

and an inability to refer disputes to arbitration or to have a choice with regard to arbitration rules, venue

and language. Mitigation measures for these risks may be limited.

The Group employs personnel and contracts  for  the services of professionals, advisers, consultants

and  others  to  supply  their  expertise  to  the  Group  and  such  personnel,  professionals,  advisers,

consultants  and  others  advise  the Group  and may make  submissions  or  declarations  on  behalf  of

members of the Group. There is a risk that advice given by these persons may be incorrect or that such

submissions or declarations may contain mistakes.

Packaging waste responsibility compliance

The Group’s distribution centre handles packaging waste which holds, protects, delivers and presents

its products. The United Kingdom has producer responsibility  legislation relating to packaging waste,

which obliges businesses which handle packaging waste above certain specified thresholds to register

as  “obligated  packaging  producers”  and  comply  with  applicable  legislation.  Non-compliance  with

applicable legislation is an offence and the appropriate regulator either can prosecute or, as a result of

more recent enforcement powers, potentially impose a financial penalty, or accept a financial offering,

reflective of the perceived severity of the non-compliance.

Battery and Lighting environmental compliance risk

The EU Waste Electrical and Electronic Equipment (“WEEE”) regime (implemented in the UK by TheWaste Electrical and Electronic Equipment Regulations 2013 as amended) aims to:

•         Prevent WEEE and encourage  its  reuse,  recycling and other  forms of  recovery  to  reduce  the

need to dispose of it;

•         Improve the environmental performance of all operators involved in the life cycle of electrical and

electronic equipment (“EEE”); and

50

•         Protect  the environment and human health by preventing or  reducing  the adverse  impacts of

WEEE.

The WEEE regime does this by placing financial responsibilities on producers and distributors of EEE

to pay for collection and disposal schemes for WEEE. This forms part of a wider package of “producer

responsibility schemes”, which includes the packaging waste regime referred to above. Presently there

are 10 categories of WEEE which include lighting appliances. From 15 August 2018 the categories will

be broadened. The WEEE regime requires:

•         That  final  holders  and  distributors  can  return  household  WEEE  free  of  charge  for  re-use,

disassembly and recycling to producers (or third parties acting on their behalf);

•         Producers to finance the collection, treatment, recovery and environmentally-sound disposal of

WEEE from private households that has been deposited at certain collection facilities; and

•         Producers to finance the collection, treatment, recovery and environmentally-sound disposal of

WEEE from products placed on the market after 13 August 2005 from non-domestic users.

The  cost  of  this  regime applies  to  some of  the Group’s  batteries  and  lighting  products. The WEEE

regime  complements  and  mirrors  the  batteries  regime  under  the  Batteries  Directive  2006,  which

provides for a similar producer responsibility scheme for the collection, treatment and recycling of waste

batteries. Portable batteries in particular may fall under the scope of WEEE and are a key product of

the Group.

Data privacy breaches or failure to protect confidential information

Supreme is subject to a number of laws relating to privacy and data protection, including the UK’s Data

Protection Act 1988 and the Privacy and Electronic Communications (EC Directive) Regulations 2003,

as  well  as  relevant  non-EEA  data  protection  and  privacy  laws  and  the  General  Data  Protection

Regulation  of  the EU. Such  laws  govern  the Group’s  ability  to  collect,  use  and  transfer  information

relating to its customers, including the use of that information for marketing purposes. Supreme relies

on  third party contractors and  its own employees  to collect data and  to maintain  its databases and,

therefore,  is  exposed  to  the  risk  that  such  data  could  be  wrongfully  accessed,  appropriated,  lost,

disclosed,  damaged  or  processed  in  breach  of  data  protection  regulations.  The  Group  processes

employee personal data and customer personal data and, through third parties, as part of its business

and  therefore must  comply with  strict  data  protection  and  privacy  laws  in  the European Union  and

certain other jurisdictions in which the Group operates. Those laws restrict Supreme’s ability to collect,

use and delete customer information. The Group is exposed to the risk that customer data could in the

future be wrongfully accessed, appropriated, lost, retained, disclosed, damaged or processed in breach

of data protection regulations.

If the Group or any of the third party service providers on which it relies fails to process and/or transfer

customer information and payment details online in a secure manner, or if any unauthorised or unlawful

loss, theft, retention, disclosure or destruction of customer data were otherwise to occur, the Group may

be subject to claims from third parties relating to the infringement of privacy rights or data protection

laws  and/or  investigative  or  enforcement  action  (including  criminal  proceedings  and  significant

pecuniary penalties) by the Information Commissioner’s Office in the UK or similar regulatory authorities

in other jurisdictions in which Supreme operates. This could also result in the loss of the goodwill of its

customers, damage the Group’s reputation and deter new customers. Each of these factors could harm

the  Group’s  business,  revenue,  financial  condition,  profitability,  results,  prospects  and/or  future

operations.

Despite controls to protect the confidentiality and integrity of customer and other information, Supreme

may breach restrictions or may be subject to attack from computer programs that attempt to penetrate

its  network  security  and  misappropriate  confidential  information. Any  perceived  or  actual  failure  to

protect confidential data could harm the Group’s reputation and credibility, reduce its sales, reduce its

ability to attract and retain customers or result in litigation or other actions being brought against it or

the imposition of fines and, as a result, could have a material adverse effect on the Group’s business,

revenue, financial condition, profitability, results, prospects and/or future operations.

51

Whilst Supreme strives  to comply with all applicable  laws,  regulations, policies and  legal obligations

relating  to  privacy  and  data  protection, there is a  risk that Group  policies  and  measures may not

deemed sufficient in order to comply with the latest data protection regulations or regulatory guidance.

RISKS RELATING TO THE VAPING INDUSTRY

Changes in existing laws and regulations and the imposition of new laws

Vaping  is  a  recent  innovation  compared  to  traditional  cigarettes,  with  e-cigarette  products  being

introduced  to  the European market approximately 14 years ago. Accordingly,  there are no  long-term

health  studies  of  the  effect  of  vaping  on  users. Whilst  recent  reports  (e.g.  Public  Health  England’s

Evidence update review of e-cigarettes dated March 2020) tend to support vaping as being substantially

less harmful than smoking and a potential aid to cease smoking, future reports may take a different view

based on  longer term studies which may affect  the Group’s revenues and profits. As vaping devices

have become more popular  in  recent  years,  there  is  a  risk of  government action  to  introduce more

stringent laws and regulations to regulate this rising substitute for conventional tobacco which could for

example,  include  the prohibition of  vaping  in public  spaces which may adversely affect  the Group’s

business, financial condition and results of operations.

Tobacco duty revenues (excluding VAT) were estimated by the Tobacco Manufacturers’ Association to

be £9.3 billion in the UK for the tax year from 6 April 2018 to 5 April 2019. If vaping leads to a reduction

in  traditional smoking, government may  look  to any  replacement, e.g. vaping,  for additional  taxes  to

make up some or all the shortfall. A reduction in vaping or an increase in taxes may lead to the Group’s

revenues or profits being adversely affected.

The Group manufactures and or distributes vaping products which are subject to regulation. Details of

the regulation of vaping is set out in Part II of this document.

Developing new vaping products

Innovation in vaping hardware has led to a progression from cigarette like devices using cartridges to

devices that use e-liquids and tanks. Future changes to hardware and the method of vaping (e.g. closed

vape systems, open vape systems and heat not burn devices) may leave the Group at a competitive

disadvantage if it is not able to continue to successfully develop its product offering, cannot keep pace

with changes to consumer preferences, or fails to do so in a timely manner or fails to have adequate

supplies to meet demand.

The Group may not be able to identify, develop and manufacture new products successfully, if at all, or

on a timely basis. If we fail to successfully develop or sell new products, the Group’s business, financial

conditions and results of operations may be materially and adversely affected.

Impact of vaping on health

Should  the  usage  of  vaping  devices  be  identified  as  presenting  long-term  health  risks,  the market

demands for vaping devices may decline significantly, which may materially and adversely affect  the

Group’s business, financial conditions and results of operations. With vaping only introduced to the UK

market in 2006, the medical profession is still in the course of studying the long-term health effects of

vaping notwithstanding the supportive positioning taken by the NHS, Public Health England and Cancer

Research UK.  If  the medical profession concludes  that vaping device usage poses  long-term health

risks  or  is  linked  to  respiratory  illness  or  other  diseases,  the  health  awareness  of  customers  may

increase and the market demands may significantly decline, which would have a material adverse effect

on our business, financial conditions and results of operations.

Payment Methods

When sales are conducted over the internet or through other third party platforms the Group accepts

payment  through a variety of methods e.g.  credit  card, debit  card, PayPal, Shopify. These payment

methods are not under the control of the Group and could be withdrawn which could harm the Group’s

business,  revenue,  financial  condition,  profitability,  results,  prospects  and/or  future  operations.  In

particular 88Vape received a notification from PayPal that due to increased scrutiny from regulators and

payment  partners, PayPal  had  introduced  additional  controls  regarding  the  sale  of  e-cigarettes  and

related  products  and  requesting  certain  information.  The  Group  has  replied  to  that  request  in

September 2020, has received no further communication from PayPal in respect thereof and continues

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to receive payments through PayPal. Whilst the platform will switch to another payment provider should

Paypal take further action, there may be a short term disruption to 88vape.com

RISKS RELATING TO THE PLACING AND THE SHARES

Share price volatility and liquidity

AIM is a trading platform designed principally for growth companies, and as such, tends to experience

lower levels of trading liquidity than larger companies quoted on the Official List or some other stock

exchanges. Following Admission there can be no assurance that an active or liquid trading market for

Shares will develop or, if developed, that it will be maintained. The Shares may therefore be subject to

large fluctuations on small volumes of shares traded. As a result, an investment in shares traded on AIM

carries a higher risk than those listed on the Official List.

Prospective investors should be aware that the value of an investment in the Group may go down as

well as up and that the market price of Shares may not reflect the underlying value of the Group. There

can be no guarantee that the value of an investment in the Group will increase. Investors may therefore

realise less than or lose all of, their original investment. The share prices of publicly quoted companies

can be highly volatile and shareholdings illiquid. The price at which Shares are quoted and the price

which investors may realise for their Shares may be influenced by a large number of factors, some of

which are general or market specific, others which are sector specific and others which are specific to

the Group and its operations. These factors include, without limitation, (i) the performance of the overall

stock market, (ii) large purchases or sales of Shares by other investors, (iii) financial and operational

results of the Group (iv) changes in analysts’ recommendations and any failure by the Group to meet

the  expectations  of  the  research  analysts,  (v)  changes  in  legislation  or  regulations  and  changes  in

general  economic,  political  or  regulatory  conditions,  and  (vi)  other  factors  which  are  outside  of  the

control of the Group.

Shareholders  may  sell  their  Shares  in  the  future  to  realise  their  investment.  Sales  of  substantial

amounts of Shares following Admission and/or termination of the lock-in restrictions (the terms of which

are summarised in paragraph 9 of Part IX of this document), or the perception that such sales could

occur, could materially adversely affect the market price of Shares available for sale compared to the

demand to buy Shares. There can be no guarantee that the price of Shares will reflect their actual or

potential market value or the underlying value of the Group’s net assets and the price of Shares may

decline below  the Placing Price. Shareholders may be unable  to  realise  their Shares at  the quoted

market price or at all.

Funding

The Group is currently cash generative and benefits from sufficient working capital for the near term.

However, there is a risk that the Group may need to raise funding in the future for a number of reasons,

including  working  capital,  to  fund  an  acquisition  or  expansion,  general  corporate  purposes  or  to

restructure its balance sheet. At present, the Directors do not believe there is any requirement to raise

any further external finance for the Group.

Investment risk

An investment in a quoted company is highly speculative, involves a considerable degree of risk and is

suitable only for persons or entities which have substantial financial means and who can afford to hold

their ownership  interests  for an  indefinite amount of  time or  to  lose  their  investment principal. While

various investment opportunities are available, potential investors should consider the risks that pertain

to trading companies in general.

Dilution

If the Company were to offer equity securities for sale in the future, Shareholders not participating in

these  equity  offerings  may  become  diluted  and  pre-emptive  rights  may  not  be  available  to  certain

Shareholders. The Company may also in the future issue Shares, warrants and/or options to subscribe

for  new  Shares,  including  (without  limitation)  to  certain  advisers,  employees,  directors,  senior

management and consultants. The exercise of such warrants and/or options may also result in dilution

of the shareholdings of other investors.

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Dividends may not be paid

While the Company intends to pay bi-annual dividends going forward, the declaration and payment of

any future dividends will be subject to the discretion of the Directors, and subject to compliance with the

Companies Act and  the Company’s Articles of Association, will depend on  the Company’s earnings,

financial position, cash requirements, strategic goals and availability of distributable reserves.

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PART IV

HISTORICAL FINANCIAL INFORMATION RELATING TO THE GROUP

SECTION A: ACCOUNTANT’S REPORT ON THE HISTORICAL FINANCIAL INFORMATIONRELATING TO THE GROUP

                                                                                                                       BDO LLP                                                                                                          3 Hardman Street                                                                                                                    Manchester

                                                                                                                                                      M3 3AT

The DirectorsSupreme plc4 Beacon RoadAshburton ParkTrafford ParkManchesterM17 1AF

Grant Thornton UK LLP30 Finsbury SquareLondonEC2A 1AG                                                                                                                       27 January 2021

Ladies and Gentlemen

Supreme plc (the “Company”)and its subsidiaries (together, the “Group”)

Introduction

We report on the financial information set out in Section B of Part IV. This financial information has beenprepared  for  inclusion  in  the  admission  document  dated 27  January 2021  of  the  Company  (the“Admission  Document”)  on  the  basis  of  the  accounting  policies  set  out  in  note  2  to  the  financialinformation. This report is required by paragraph (a) of Schedule Two of the AIM Rules for Companiesand is given for the purpose of complying with that paragraph and for no other purpose.

Responsibilities

The directors of the Company are responsible for preparing the financial information in accordance withInternational Financial Reporting Standards as adopted by the European Union.

It is our responsibility to form an opinion on the financial information and to report our opinion to you.

Save  for  any  responsibility  arising  under  paragraph  (a)  of  Schedule  Two  of  the  AIM  Rules  forCompanies to any person as and to the extent there provided, to the fullest extent permitted by the lawwe do not assume any responsibility and will not accept any liability to any other person for any losssuffered by any such other person as a result of, arising out of, or in connection with this report or ourstatement, required by and given solely for the purposes of complying with Schedule Two of the AIMRules for Companies consenting to its inclusion in the Admission Document.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts  and  disclosures  in  the  financial  information.  It  also  included  an  assessment  of  significantestimates and judgements made by those responsible for the preparation of the financial  informationand whether the accounting policies are appropriate to the entity’s circumstances, consistently appliedand adequately disclosed.

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We planned and performed our work so as  to obtain all  the  information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial information is free from material misstatement whether caused by fraud or other irregularityor error.

Our  work  has  not  been  carried  out  in  accordance  with  auditing  or  other  standards  and  practicesgenerally accepted in the United States of America or other jurisdictions outside the United Kingdomand  accordingly  should  not  be  relied  upon  as  if  it  had  been  carried  out  in  accordance  with  thosestandards and practices.

Opinion

In our opinion, the financial information gives, for the purposes of the Admission Document, a true andfair view of the state of affairs of Supreme as at 31 March 2019 and 2020 and of its profits, cash flowsand changes in equity for the nine months ended 31 March 2019 and the year ended 31 March 2020in accordance with the basis of preparation set out in note 1 to the financial information.

Declaration

For  the  purposes  of  Paragraph  (a)  of  Schedule  Two  of  the  AIM  Rules  for  Companies,  we  areresponsible  for  this  report  as  part  of  the Admission  Document  and  declare  that  we  have  taken  allreasonable care to ensure that the information contained in this report is, to the best of our knowledge,in  accordance with  the  facts  and  contains no omission  likely  to  affect  its  import. This  declaration  isincluded in the Admission Document in compliance with Schedule Two of the AIM Rules for Companies.

Yours faithfully

BDO LLPChartered Accountants

BDO LLP  is  a  limited  liability  partnership  registered  in England  and Wales  (with  registered  numberOC305127)

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SECTION B: HISTORICAL FINANCIAL INFORMATION RELATING TO THE GROUP

Consolidated Statement of Comprehensive Income                                                                                                                             9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                        Note                 £’000                 £’000

Revenue                                                                                                5               62,354               92,329Cost of sales                                                                                         6             (44,868)            (65,509)                                                                                                                           ————           ————Gross profit 17,486 26,820Administration expenses                                                                       6               (7,407)            (12,827)                                                                                                                           ————           ————Operating profit 10,079 13,993Adjusted EBITDA1 11,239 16,209Depreciation                                                                                14 & 22                  (910)              (1,548)Amortisation                                                                                        13                    (10)                   (25)Exceptional items                                                                                  7                  (240)                 (643)

Operating profit 10,079 13,993Finance income                                                                                     9                      28                        3Finance costs                                                                                      10                  (505)                 (783)                                                                                                                           ————           ————Profit before taxation 9,602 13,213Income tax                                                                                           11               (1,733)              (2,318)                                                                                                                           ————           ————Profit for the year 7,869 10,895                                                                                                                           ————           ————Other comprehensive income/(loss)Currency translation differences                                                                                     –                      (9)                                                                                                                           ————           ————Total comprehensive income for the year 7,869 10,886                                                                                                                           ————           ————Earnings per share – basic                                                                 12                 £0.07                 £0.10Earnings per share – diluted                                                               12                 £0.07                 £0.10                                                                                                                           ————           ————Note 1: Adjusted EBITDA, which is defined as profit before finance costs, tax, depreciation, amortisation, exceptional items, andprofit/(loss) from transactions in non-hedging foreign exchange derivative contracts is a non-GAAP metric used by managementand is not an IFRS disclosure.

All results derive from continuing operations.

57

Consolidated Statement of Financial Position                                                                                                                             As at As at 31 March 31 March 2019 2020                                                                                                        Note                 £’000                 £’000

AssetsGoodwill and other intangibles                                                            13                    768                 1,778Property, plant and equipment                                                            14                 2,808                 3,458Right of use asset                                                                               22                 2,014                 1,495Investments                                                                                         15                      60                        7Deferred tax                                                                                        16                      31                        –                                                                                                                           ————           ————Total non-current assets 5,681 6,738                                                                                                                           ————           ————Current assetsInventories                                                                                           17               15,033               14,458Trade and other receivables                                                               18               14,041               16,739Derivative financial instruments                                                       23.9                        –                    209Income tax recoverable                                                                                                  –                        9Cash and cash equivalents                                                                 19                 1,694                 6,718                                                                                                                           ————           ————Total current assets 30,768 38,133                                                                                                                           ————           ————Total assets 36,449 44,871                                                                                                                           ————           ————LiabilitiesCurrent liabilitiesBorrowings                                                                                          21                 4,799                 7,181Trade and other payables                                                                   20                 7,511               13,682Income tax payable                                                                                                 1,953                 2,340                                                                                                                           ————           ————Total current liabilities 14,263 23,203                                                                                                                           ————           ————Net current assets 16,505 14,930                                                                                                                           ————           ————Borrowings                                                                                          21               18,008               17,413Deferred tax liability                                                                             16                        –                    191                                                                                                                           ————           ————Total non-current liabilities 18,008 17,604                                                                                                                           ————           ————Total liabilities 32,271 40,807                                                                                                                           ————           ————Net assets 4,178 4,064                                                                                                                           ————           ————EquityShare capital                                                                                       24               11,001               11,001Merger reserve                                                                                                     (22,000)            (22,000)Retained earnings                                                                                                 15,177               15,063                                                                                                                           ————           ————Total equity 4,178 4,064                                                                                                                           ————           ————

58

Consolidated Statement of Changes in Equity                                                                                      Share Merger Retained Total Capital reserve earnings equity                                                                             £’000                 £’000                 £’000                 £’000

As at 1 July 2018                                               11,001             (22,000)             23,274               12,275Profit for the period                                                      –                        –                 7,869                 7,869 ————           ————           ————           ————Total comprehensive income for the period                –                        –                 7,869                 7,869 ————           ————           ————           ————Transactions with shareholders:Dividends                                                                     –                        –             (16,288)            (16,288)Share based payments credit (note 25)                      –                        –                    322                    322 ————           ————           ————           ————As at 31 March 2019 11,001 (22,000) 15,177 4,178 ————           ————           ————           ————Profit for the year                                                         –                        –               10,895               10,895Other comprehensive loss                                           –                        –                      (9)                     (9) ————           ————           ————           ————Total comprehensive income for the year                    –                        –               10,886               10,886 ————           ————           ————           ————Transactions with shareholders:Dividends                                                                     –                        –              (11,000)            (11,000) ————           ————           ————           ————As at 31 March 2020 11,001 (22,000) 15,063 4,064 ————           ————           ————           ————

59

Consolidated Statement of Cash Flows                                                                                                                             9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                        Note                 £’000                 £’000

Net cash flow from operating activitiesProfit for the period/year                                                                                          7,869               10,895Adjustments for:Amortisation of intangible assets                                                        13                      10                      25Depreciation of tangible assets                                                  14 & 22                    910                 1,548Fixed asset investment written off                                                       15                        –                      60Finance income                                                                                     9                    (28)                     (3)Finance costs                                                                                      10                    505                    783Amortisation of capitalised finance costs                                                                       –                    149Income tax expense                                                                            11                 1,733                 2,318Share based payments expense                                                        25                    322                        –Working capital adjustments(Increase)/decrease in inventories                                                                         (4,167)               2,472Increase in trade and other receivables                                                                 (2,270)                 (942)Increase in trade and other payables                                                                      2,062                 1,442Taxation paid                                                                                                             (986)              (1,716)                                                                                                                           ————           ————Net cash from operations                                                                                     5,960 17,031                                                                                                                           ————           ————Cash flows used in investing activitiesPurchase of intangible fixed assets                                                    13                  (435)                   (26)Purchase of property, plant and equipment                                        14                  (882)              (1,655)Purchase of subsidiaries net of cash acquired                                   26                        –               (3,547)Proceeds from sale of property, plant and equipment                                                192                        –Interest received                                                                                                           28                        3                                                                                                                           ————           ————Net cash used in investing activities                                                                 (1,097) (5,225)                                                                                                                           ————           ————Cash flows used in financing activitiesDrawdown of loans                                                                             21               15,572                 6,000Repayment of loans                                                                            21                        –               (4,066)Drawdown of other loans                                                                    21                        –                 3,735Repayment of other loans                                                                   21               (3,150)                      –Dividends paid                                                                                                      (16,288)            (11,000)Finance costs paid                                                                                                    (432)                 (691)Lease payments                                                                                  22                  (364)                 (579)                                                                                                                           ————           ————Net cash used in financing activities                                                                 (4,662) (6,601)                                                                                                                           ————           ————Net increase in cash and cash equivalents                                                           201 5,205Cash and cash equivalents brought forward                                                      1,342                 1,543Foreign exchange                                                                                                           –                    (30)                                                                                                                           ————           ————Cash and cash equivalents carried forward                                                       1,543 6,718                                                                                                                           ————           ————Cash and cash equivalents                                                                 19                 1,694                 6,718Bank overdraft                                                                                     21                  (151)                      –                                                                                                                           ————           ————                                                                                                                                1,543                 6,718                                                                                                                           ————           ————

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Notes to the Historical Financial Information

1. Basis of preparation

Supreme Ltd (the “Company”) is domiciled in the UK, with company registration number 05844527. Theprincipal activity  is  the wholesale distribution of batteries,  lighting, vaping and  the associated sundryproducts,  sports  nutrition  and  wellness  products  and  branded  household  consumer  goods.  Theregistered office is 4 Beacon Road, Ashburton Park, Trafford Park, Manchester, M17 1AF.

This historical  financial  information (“Historical Financial  Information”) has been prepared on a goingconcern  basis  under  the  historical  cost  convention, modified  for  the  revaluation  of  certain  financialinstruments; in accordance with International Financial Reporting Standards (IFRSs) as adopted by theEU, the International Financial Reporting Interpretations Committee (IFRIC)  interpretations issued bythe  International Accounting Standards Boards  (“IASB”)  that  are  effective  or  issued  and  have  beenadopted as at the time of preparing this Historical Financial Information, except as described below.

The deemed  transition date  to  IFRS,  for  the purposes of  this Historical Financial  Information on  theCompany is 1 July 2018, which is the beginning of the first year presented. Details of the transition areset out in Note 32. The principles and requirements for first time adoption of IFRS are set out in IFRS 1.IFRS 1 allows certain exceptions and exemptions in the application of particular standards to prior yearsin  order  to  assist  companies with  the  transition  process. The Company  has  not  applied  any  of  theoptional  exemptions  and  has  applied  the  exception  with  regard  to  restatement  of  past  businesscombinations under IFRS 3. Contrary to the requirements of IFRS 1, a balance sheet as at the date oftransition of 1 July 2018 has not been presented and this is therefore a departure from the requirementsof IFRS. In all other respects IFRS has been applied.

This Historical Financial Information presents the financial track record of the Company for the 9 monthperiod from 1 July 2018 to 31 March 2019 and the year ended 31 March 2020 and is prepared for thepurposes  of  admission  to AIM,  a  market  operated  by  the  London  Stock  Exchange.  This  HistoricalFinancial  Information  has  been prepared  in  accordance with  the  requirements  of  the AIM Rules  forCompanies and in accordance with this basis of preparation summarised below.

The preparation of Historical Financial Information requires the Directors to exercise their judgement inthe  process  of  applying  accounting  policies.  The  areas  involving  a  higher  degree  of  judgement  orcomplexity,  or  areas  where  assumptions  and  estimates  are  significant  to  the  Historical  FinancialInformation are disclosed in Note 4.

The financial information for the year ended 31 March 2020 and the 9 month period ended 31 March2019 does not constitute the company’s statutory accounts for those years.

Statutory accounts for the year ended 31 March 2020 and 9 month period ended 31 March 2019 havebeen delivered to the Registrar of Companies.

The auditors’ reports on the accounts for 31 March 2020 and 31 March 2019 were unqualified, did notdraw attention  to any matters by way of emphasis, and did not contain a statement under 498(2) or498(3) of the Companies Act 2006.

The Historical Financial Information is presented in sterling and, unless otherwise stated, amounts areexpressed in pounds, to the nearest thousand.

The Board are, together, considered the chief operating decision maker.

2. Summary of significant accounting policies

The principal accounting policies adopted are set out below.

2.1 Basis of consolidation

The consolidated Historical Financial  Information presents the  results of  the Company and  itsown subsidiaries as if they form a single entity. Intercompany transactions and balances betweengroup companies are therefore eliminated in full.

The  consolidated  Historical  Financial  Information  incorporates  the  results  of  businesscombinations using the purchase method. In the Consolidated Statement of Financial Position,

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the  acquiree’s  identifiable  assets,  liabilities  and  contingent  liabilities  are  initially  recognised attheir  fair values at  the acquisition date. The results of acquired operations are  included  in  theConsolidated Statement of Comprehensive Income from the date on which control is obtained.They  are  deconsolidated  from  the  date  control  ceases. The merger  reserve  arose  on  a  pastbusiness  combination of  entities  that were under  common control. The merger  reserve  is  thedifference between the cost of investment and the nominal value of the share capital acquired.

2.2 Going concern

Supreme Ltd is funded by external banking facilities provided by HSBC until March 2024, as wellas through surplus cash held at bank. Taking account of these facilities and having consideredfuture strong trading and cash flow forecasts, the Directors have a reasonable expectation thatthe Company has adequate resources to continue in operational existence for the foreseeablefuture. Accordingly,  the Directors  continue  to  adopt  the  going  concern  basis  in  preparing  theHistorical Financial Information.

2.3 Currencies

Functional and presentational currency

Items  included  in  the Historical Financial  Information are measured using  the currency of  theprimary economic environment in which the Company operates (“the functional currency”) whichis UK sterling (£). The Historical Financial Information is presented in UK sterling.

Transactions and balances

Foreign  currency  transactions  are  translated  into  the  functional  currency  using  a  standardexchange rate for a period if the rates do not fluctuate significantly. Foreign exchange gains andlosses  resulting  from  the settlement of such  transactions and  from  the  translation at year-endexchange  rates  of  monetary  assets  and  liabilities  denominated  in  foreign  currencies  arerecognised in the statement of comprehensive income. Non-monetary items that are measuredin terms of historical cost in a foreign currency are not retranslated.

2.4 Revenue recognition

Revenue  solely  relates  to  the  sale  of  goods  and  arises  from  the  wholesale  distribution  ofbatteries, lighting, vaping and the associated sundry products.

To determine whether to recognise revenue, the Company follows the 5-step process as set outwithin IFRS 15:

1.       Identifying the contract with a customer.

2.       Identifying the performance obligations.

3.       Determining the transaction price.

4.       Allocating the transaction price to the performance obligations.

5.       Recognising revenue when/as performance obligation(s) are satisfied.

Revenue  is measured  at  transaction  price,  stated  net  of  VAT,  and  other  sales  related  taxes.Rebates  to  customers  take  the  form  of  volume  discounts,  which  are  a  type  of  variableconsideration, and the transaction price is constrained to reflect the rebate element.

Revenue is recognised at a point in time as the Company satisfies performance obligations bytransferring the promised goods to its customers as described below. Variable consideration, inthe form of rebates, is also recognised at the point of transfer, however the estimate of variableconsideration is constrained at this point and released once it is highly probable there will not bea significant reversal.

Contracts with customers take the form of customer orders. There is one distinct performanceobligation, being the distribution of products to the customer,  for which the transaction price  isclearly  identified.  Revenue  is  recognised  at  a  point  in  time  when  the  Company  satisfiesperformance obligations by transferring the promised goods to its customers,  i.e. when control

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has passed from the Company to the customer, which tends to be on receipt by the customer. Inrespect of certain direct shipments control passes when an invoice is raised, payment received,and title formally transferred to the customer.

2.5 Goodwill

The carrying value of goodwill has arisen following the acquisition of subsidiary entities, wherethe  trade  and  assets  have  subsequently  been  hived  up  into  this  company  immediately  postacquisition, and the related investment balance transferred to goodwill. Such goodwill is subjectto an impairment review, both annually and when there is an indication that the carrying valuemay be impaired. Any impairment is recognised immediately in the Statement of ComprehensiveIncome and is not reversed.

2.6 Other intangible assets

Other  intangible  assets  that  are  acquired  by  the  Group  are  stated  at  cost  less  accumulatedamortisation and accumulated impairment losses.

The amortisation is charged on a straight line bases as follows:

Domain name – 10%Trademarks – 10%Customer relationships – 20%

2.7 Property, plant and equipment

Property,  plant  and  equipment  are  stated  at  cost  less  accumulated  depreciation  and  anyimpairment  losses.  Cost  includes  the  original  purchase  price  of  the  asset  and  the  costsattributable  to  bringing  the  asset  to  its working  condition  for  its  intended use. Depreciation  ischarged so as to write off the costs of assets over their estimated useful lives, on a straight-linebasis starting from the month they are first used, as follows:

Plant and machinery – 25%Fixtures and fittings – 25%Motor vehicle – 25%Fashion hire assets – 25%

The gain or loss arising on the disposal of an asset is determined as the difference between thesales  proceeds  and  the  carrying  amount  of  the  asset  and  is  recognised  in  the  Statement  ofComprehensive Income.

At  each  reporting date,  the Company  reviews  the  carrying amounts  of  its  property,  plant  andequipment assets to determine whether there is any indication that those assets have sufferedan  impairment  loss.  If  any  such  indication  exists,  the  recoverable  amount  of  the  asset  isestimated in order to determine the extent of the impairment loss (if any).

Fashion Hire assets are presented within property, plant and equipment. Revenue is generatedfrom these assets through hire to third party customers.

2.8 Inventories

Inventories are valued using a first in, first out method and are stated at the lower of cost and netrealisable value. Cost includes expenditure incurred in the normal course of business in bringingthe products to their present location and condition.

At  the  end  of  each  reporting  period  inventories  are  assessed  for  impairment.  If  an  item  ofinventory is impaired, the identified inventory is reduced to its selling price less costs to completeand sell and an impairment charge is recognised in the income statement. Where a reversal ofthe impairment  is recognised the impairment charge is reversed, up to the original  impairmentloss, and is recognised as a credit in the income statement.

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2.9 Income tax

The tax expense or credit represents the sum of the tax currently payable or recoverable and themovement in deferred tax assets and liabilities.

(a) Current income tax

Current  tax  is  based  on  taxable  income  for  the  year  and  any  adjustment  to  tax  fromprevious years. Taxable income differs from net income in the statement of comprehensiveincome because it excludes items of income or expense that are taxable or deductible inother years or that are never taxable or deductible. The calculation uses the latest tax ratesfor the year that have been enacted or substantively enacted by the dates of the Statementof Financial Position.

(b) Deferred tax

Deferred tax is calculated at the latest tax rates that have been substantively enacted bythe reporting date that are expected to apply when settled. It is charged or credited in theStatement of Comprehensive Income, except when it relates to items credited or chargeddirectly to equity, in which case it is also dealt with in equity.

Deferred tax is the tax expected to be payable or recoverable on differences between thecarrying amounts of assets and  liabilities  in  the Historical Financial  Information and  thecorresponding tax bases used in the computation of taxable income, and is accounted forusing the liability method. It is not discounted.

Deferred tax liabilities are generally recognised for all taxable temporary differences anddeferred tax assets are recognised to the extent that it is probable that taxable income willbe available against which the asset can be utilised. Such assets are reduced to the extentthat it is no longer probable that the asset can be utilised.

Deferred  tax  assets  and  liabilities  are  offset  when  there  is  a  right  to  offset  current  taxassets and liabilities and when the deferred tax assets and liabilities relate to taxes leviedby the same taxation authority on either the same taxable entity or different taxable entitieswhere there is an intention to settle the balances on a net basis.

2.10 Leases

The Company has applied IFRS 16 throughout the period covered by the HFI. At inception of acontract,  the Company assesses whether a contract  is, or  contains, a  lease. A contract  is, orcontains, a lease if the contract conveys the right to control the use of an identified asset for aperiod of time in exchange for consideration.

The Company recognises a right-of-use asset and a lease liability at the lease commencementdate. The right-of-use asset  is  initially measured at cost, which comprises the initial amount ofthe lease liability adjusted for any lease payments made at or before the commencement date,plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, lessany lease incentives received.

The  right-of-use  asset  is  subsequently  depreciated  using  the  straight-line  method  from  thecommencement date to the earlier of the end of the useful life of the right-of-use asset or the endof the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses,if any, and adjusted for certain remeasurements of the lease liabilities.

The lease liability is initially measured at the present value of lease payments that were not paidat the commencement date, discounted using the Company’s incremental borrowing rate.

The lease liability is measured at amortised cost using the effective interest method. If there is aremeasurement of the lease liability, a corresponding adjustment is made to the carrying amountof the right-of-use asset, or is recorded directly in profit or loss if the carrying amount of the rightof use asset is zero.

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Short term leases and low value assets

The Company has elected not to recognise right-of-use assets and lease liabilities for short-termlease of machinery that have a lease term of 12 months or less or leases of low value assets.These lease payments are expensed on a straight-line basis over the lease term.

2.11 Payroll expense and related contributions

The Company provides a range of benefits to employees, including annual bonus arrangements,paid holiday arrangements and defined contribution pension plans.

Short  term  benefits,  including  holiday  pay  and  other  similar  non-monetary  benefits,  arerecognised as an expense in the period in which the service is received.

2.12 Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grantis charged to profit or loss over the vesting period. Non-market vesting conditions are taken intoaccount by adjusting  the number of equity  instruments expected  to vest at each Statement ofFinancial Position date so  that, ultimately,  the cumulative amount  recognised over  the vestingperiod  is  based on  the  number  of  options  that  eventually  vest. Market  vesting  conditions  arefactored  into  the  fair value of  the options granted. The cumulative expense  is not adjusted forfailure to achieve a market vesting condition.

The  fair  value  of  the  award  also  takes  into  account  non-vesting  conditions. These  are  eitherfactors beyond the control of either party (such as a target based on an index) or factors whichare within the control of one or other of the parties (such as the Group keeping the scheme openor the employee maintaining any contributions required by the scheme).

Where the terms and conditions of options are modified before they vest, the increase in the fairvalue of the options, measured immediately before and after the modification, is also charged tothe Statement of Comprehensive Income over the remaining vesting period.

Where  equity  instruments  are  granted  to  persons  other  than  employees,  the  Statement  ofComprehensive Income is charged with fair value of goods and services received.

2.13 Pension costs

The Company operates a defined contribution pension scheme for employees. The assets of thescheme are held separately from those of the Company. The annual contributions payable arecharged to the statement of comprehensive income.

2.14 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided tothe  chief  operating  decision-maker.  The  chief  operating  decision-maker  is  responsible  forallocating resources and assessing performance of operating segments.

The Directors consider that there are five identifiable business segments, being the distributionof  batteries,  lighting,  vaping,  sports  nutrition  &  wellness,  and  branded  household  consumergoods.

2.15 Dividends

Dividends are recognised as a liability and deducted from equity at the time they are approved.Otherwise dividends are disclosed if  they have been proposed or declared before the relevantfinancial statements are approved.

2.16 EBITDA and Adjusted EBITDA

Earnings  before  Interest,  Taxation,  Depreciation  and  Amortisation  (“EBITDA”)  and  AdjustedEBITDA are non-GAAP measures used by management to assess the operating performance ofthe  Company.  EBITDA  is  defined  as  profit  before  finance  costs,  tax,  depreciation  andamortisation. Exceptional items are excluded from EBITDA to calculate adjusted EBITDA.

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The Directors  primarily  use  the Adjusted EBITDA measure when making  decisions  about  theCompany’s activities as  this provides useful  information  for shareholders on underlying  trendsand performance. As these are non-GAAP measures, EBITDA and Adjusted EBITDA measuresused  by  other  entities  may  not  be  calculated  in  the  same  way  and  hence  are  not  directlycomparable.

2.17 Exceptional costs and non-recurring items

The Company’s income statement separately identifies exceptional items. Such items are thosethat in the Directors’ judgement are one-off in nature or non-operating and need to be disclosedseparately by virtue of their size or incidence and may include, but are not limited to, professionalfees and other costs directly related to refinancing, acquisitions and capital transactions, materialimpairments of  inventories and  fashion hire assets.  In determining whether an  item should bedisclosed as an exceptional item, the Directors consider quantitative and qualitative factors suchas the  frequency, predictability of occurrence and significance. This  is consistent with  the wayfinancial performance is measured by management and reported to the Board.

2.18 Financial instruments

Financial assets and financial liabilities are recognised in the Company’s Statement of FinancialPosition  when  the  Company  becomes  party  to  the  contractual  provisions  of  the  instrument.Financial  assets  are  de-recognised  when  the  contractual  rights  to  the  cash  flows  from  thefinancial asset expire or when  the contractual  rights  to  those assets are  transferred. Financialliabilities are de-recognised when the obligation specified in the contract is discharged, cancelledor expired.

Trade and other receivables

Trade  and  other  receivables  are  initially  measured  at  transaction  price  less  provisions  forexpected credit losses. The group applies the IFRS 9 simplified approach to measuring expectedcredit losses which uses a lifetime expected loss allowance. This lifetime expected credit lossesis used in cases where the credit risk on other receivables has increased significantly since initialrecognition. In cases where the credit risk has not increased significantly, the Group measuresthe loss allowance at an amount equal to the 12-month expected credit loss. This assessment isperformed on a collective basis considering forward-looking information.

IFRS 9’s impairment requirements use forward-looking information to recognise expected creditlosses – the ‘expected credit loss (ECL) model’.

Recognition of  credit  losses  is  determined by  considering a broad  range of  information whenassessing  credit  risk  and  measuring  expected  credit  losses,  including  past  events,  currentconditions and reasonable and supportable forecasts that affect the expected collectability of thefuture cash flows of the instrument.

Measurement of the expected credit losses is determined by a probability-weighted estimate ofcredit losses over the expected life of the financial instrument.

Credit Insurance is applied to all accounts over £2,500 with exception of proforma accounts andaccounts agreed by the CEO.

Interest  income  is  recognised  by  applying  the  effective  interest  rate,  except  for  short-termreceivables when the recognition of interest would be immaterial.

Cash and cash equivalents

Cash  and  cash  equivalents  consist  of  cash  on  hand,  demand  deposits,  and  other  short-termhighly liquid investments that are readily convertible to a known amount of cash and are subjectto an insignificant risk of changes in value.

Trade and other payables

Trade  and  other  payables  are  initially  measured  at  their  fair  value  and  are  subsequentlymeasured at their amortised cost using the effective interest rate method; this method allocates

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interest expense over the relevant period by applying the “effective interest rate” to the carryingamount of the liability.

Invoice discounting facility

The  company  has  entered  into  an  invoice  discounting  arrangement  with  the  bank,  where  aproportion of the debts have been legally transferred but the benefits and risks are retained bythe  Company.  Gross  receivables  are  included  within  debtors  and  a  corresponding  liability  inrespect of the proceeds received from the bank are shown within liabilities. The interest elementof  the  bank’s  charges  are  recognised  as  they  accrue  and  included  in  the  statement  ofcomprehensive income within other interest payable.

Borrowings

Interest-bearing  overdrafts  are  classified  as  other  liabilities.  They  are  initially  recorded  at  fairvalue, which represents the fair value of the consideration received, net of any direct transactioncosts associated with the relevant borrowings. Borrowings are subsequently stated at amortisedcost and finance charges are recognised in the Statement of Comprehensive Income over theterm of the instrument using an effective rate of interest. Finance charges, including premiumspayable on settlement or redemption, are accounted for on an accruals basis and are added tothe carrying amount of the instrument to the extent that they are not settled in the period in whichthey  arise.  Borrowings  are  classified  as  current  liabilities  unless  the  Company  has  anunconditional  right  to defer settlement of  the  liability  for at  least 12 months after  the  reportingdate.

Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial liabilities oras equity in accordance with the substance of the contractual arrangements and the definitionsof a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entityafter deducting all of its liabilities. Equity instruments issued by the Company are recognised atthe proceeds received, net of direct issue costs.

Derivatives

Derivatives are initially recognised at the fair value on the date the derivative contract is enteredinto and are subsequently re-measured at their fair value. Changes in the fair value of derivativesare recognised in the income statement within cost of sales, on the basis that is where the relatedexpense  is  recognised,  unless  they  are  included  in  a  hedging  arrangement.  Where  theinstruments have been traded to take advantage of currency movements and not directly linkedto  the  settlement  of  purchase  requirements  the  gain  or  loss  is  recognised  separately  in  thestatement of comprehensive income as other operating income/expense. Financial liabilities arederecognised  when  the  liability  is  extinguished,  that  is  when  the  contractual  obligation  isdischarged, cancelled or expires.

3. Financial risk management

3.1 Financial risk factors

The Company’s activities expose it to certain financial risks: market risk, credit risk and liquidityrisk. The overall risk management programme focuses on the unpredictability of financial marketsand seeks to minimise potential adverse effects on the Company’s financial performance. Riskmanagement  is carried out by  the Directors, who  identify and evaluate  financial  risks  in closeco-operation with key staff, for further details see Note 23.

(a) Market risk

Market  risk  is  the  risk  of  loss  that  may  arise  from  changes  in market  factors  such  ascompetitor pricing, interest rates, foreign exchange rates.

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(b) Credit risk

Credit risk is the financial loss to the Company if a customer or counterparty to financialinstruments fails to meet its contractual obligation. Credit risk arises from the Company’scash and cash equivalents and  receivables balances. Credit  Insurance  is applied  to allaccounts over £2,500 with exception of proforma accounts and accounts agreed by  theCEO and therefore credit risk is considered low.

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligationsas they fall due. This risk relates to the Company’s prudent liquidity risk management andimplies  maintaining  sufficient  cash.  The  Directors  monitor  rolling  forecasts  of  theCompany’s liquidity and cash and cash equivalents based on expected cash flow.

3.2 Capital risk management

The Company is funded by equity and loans. The components of shareholders’ equity are:

(a)      The share capital account arising on the issue of shares.

(b)      The retained reserve or deficit reflecting comprehensive income to date.

(c)      The banking facilities comprising a supply chain and invoice discounting facility.

The Company’s objective when managing capital  is to maintain adequate financial  flexibility topreserve its ability to meet financial obligations, both current and long term. The capital structureof  the  Company  is  managed  and  adjusted  to  reflect  changes  in  economic  conditions.  TheCompany  funds  its  expenditures  on  commitments  from  existing  cash  and  cash  equivalentbalances,  primarily  received  from  issuances  of  shareholders’  equity.  There  are  no  externallyimposed capital requirements. Financing decisions are made based on forecasts of the expectedtiming  and  level  of  capital  and  operating  expenditure  required  to  meet  the  Company’scommitments  and  development  plans.  Quantitative  data  on  what  the  Company  manages  ascapital is included in the Statement of Changes in Equity and in Note 23 to the Historical FinancialInformation.

3.3 Fair value estimation

The carrying value less impairment provision of trade receivables and payables are assumed toapproximate to their fair values because of the short-term nature of such assets and the effect ofdiscounting liabilities is negligible.

4. Critical accounting estimates and judgements

The preparation of this Historical Financial Information requires management to make judgements andestimates  that  affect  the  reported  amounts  of  assets  and  liabilities  at  each  Statement  of  FinancialPosition date and the reported amounts of revenue during the reporting periods. Actual results coulddiffer  from  these  estimates.  Information  about  such  judgements  and  estimations  are  contained  inindividual accounting policies. The key  judgements and sources of estimation uncertainty  that couldcause  an  adjustment  to  be  required  to  the  carrying  amount  of  asset  or  liabilities  within  the  nextaccounting period are outlined below:

Accounting estimates

4.1 Goodwill impairment

The  Company  tests  goodwill  for  impairment  every  year  in  accordance  with  the  relevantaccounting  policies.  The  recoverable  amounts  of  cash-generating  units  are  determined  bycalculating value in use. These calculations require the use of estimates.

Goodwill  relates  to  various  acquisitions  and  amounts  to  £613,000  at  31  March  2020.  Theestimates used  in  the  impairment calculation are set out  in Note 13. There are no reasonablypossible scenarios in which the goodwill would be impaired.

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4.2 Useful economic lives of property, plant and equipment

Property, plant and equipment is depreciated over the useful lives of the assets. Useful lives arebased on the management’s estimates of the period that the assets will generate revenue, whichare  reviewed  annually  for  continued  appropriateness.  The  carrying  values  are  tested  forimpairment when  there  is an  indication  that  the value of  the assets might be  impaired. Whencarrying out impairment tests these would be based upon future cash flow forecasts and theseforecasts  would  be  based  upon  management  judgement.  Future  events  could  cause  theassumptions to change, therefore this could have an adverse effect on the future results of theCompany.

The  useful  economic  lives  applied  are  set  out  in  the  accounting  policies  (Note  2.6)  and  arereviewed annually.

Accounting judgements

4.3 Inventory obsolescence

Management  make  use  of  judgement  in  determining  whether  certain  inventory  items  areobsolete.  Should  these  judgements  be  incorrect  there  could  be  a  material  difference  in  therecoverable value of inventory.

4.4     Right of use assets – discount rate

Management make use of judgements in determining the discount rate to be applied to the IFRS16 ‘Leases’ right of use asset and liability. This judgement determines the carrying value of theassets and liabilities, and the resulting depreciation and interest charge that is incurred.

5. Segmental analysis

The Chief Operating Decision Maker  (“CODM”)  has  been  identified  as  the  Board  of  Directors.  TheBoard reviews the Company’s internal reporting in order to assess performance and allocate resources.No  balance  sheet  analysis  is  available  by  segment  or  reviewed  by  the  CODM.  The  Board  hasdetermined that the operating segments, based on these reports, are the sale of:

•         batteries;

•         lighting;

•         vaping;

•         sports nutrition & wellness; and

•         branded household consumer goods.

The Gross profit before foreign exchange shows the results using standard foreign exchange rates thatare used throughout the year. The foreign exchange adjustment shown before gross profit is to adjustback to the actual rates incurred.

69

                                                                     Branded Sports household Year Ended nutrition consumer 31 March Batteries Lighting Vaping & wellness goods 2020                                                    £’000            £’000            £’000            £’000            £’000            £’000

Revenue                                    30,944         25,347         29,029           4,980           2,029         92,329Cost of sales                            (27,662)       (16,869)       (17,363)         (2,863)         (1,703)       (66,460)                                              ————      ————      ————      ————      ————      ————Gross profit beforeforeign exchange 3,282 8,478 11,666 2,117 326 25,869

Foreign exchange                                                                                                                                951                                                                                                                                                    ————Gross profit 26,820Administration expenses                                                                                                                (12,827)                                                                                                                                                    ————Operating profit 13,993Adjusted earnings beforetax, depreciation,amortisation andexceptional items 16,209

Depreciation                                                                                                                                     (1,548)Amortisation                                                                                                                                          (25)Exceptional items                                                                                                                                (643)

Operating profit 13,993                                                                                                                                                    ————Finance income                                                                                                                                        3Finance costs                                                                                                                                      (783)                                                                                                                                                    ————Profit before taxation 13,213Income tax                                                                                                                                       (2,318)                                                                                                                                                    ————Profit for the year 10,895                                                                                                                                                    ————                                                                                                                                                                       9 month                                                                     Branded period Sports household ended nutrition & consumer 31 March Batteries Lighting Vaping wellness goods 2019                                                    £’000            £’000            £’000            £’000            £’000            £’000

Revenue                                    27,400         16,152         16,162           2,054              586         62,354Cost of sales                            (24,662)       (12,104)         (8,880)         (1,076)            (425)       (47,147)                                              ————      ————      ————      ————      ————      ————Gross profit beforeforeign exchange 2,738 4,048 7,282 978 161 15,207

Foreign exchange                                                                                                                             2,279                                                                                                                                                    ————Gross profit 17,486Administration expenses                                                                                                                  (7,407)                                                                                                                                                    ————Operating profit 10,079

Adjusted earnings beforetax, depreciation,amortisation andexceptional items 11,239

Depreciation                                                                                                                                        (910)Amortisation                                                                                                                                          (10)Exceptional items                                                                                                                                (240)

Operating profit 10,079                                                                                                                                                    ————Finance income                                                                                                                                      28Finance costs                                                                                                                                      (505)                                                                                                                                                    ————Profit before taxation 9,602Income tax                                                                                                                                       (1,733)                                                                                                                                                    ————Profit for the year 7,869                                                                                                                                                    ————

70

Information about major customers

The Group has generated revenue from individual customers that accounted for greater than 10% oftotal revenue. The total revenue from each of these 2 customers (2019: 2 customers) was £20,853,000and £12,462,000 (2019: £13,375,000 and £9,108,000). These revenues related to all segments.

Analysis of revenue by geographical destination                                                                                                                             9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

United Kingdom                                                                                                     53,262               82,482Rest of Europe                                                                                                         8,302                 8,542Rest of the World                                                                                                        790                 1,305                                                                                                                           ————           ———— 62,354 92,329                                                                                                                           ————           ————The above revenues are all generated from contracts with customers and are recognised at a point intime. All assets of the Group reside in the UK.

6. Expenses by nature                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

The profit is stated after charging expenses as follows:Inventories recognised as an expense                                                                  41,897               57,926Impairment of inventories (excluding exceptional costs)                                                3                        –Impairment of trade receivables                                                                                   71                      14Staff costs – Note 8                                                                                                 4,081                 6,561Exceptional and non-recurring items – Note 7                                                           240                    643Establishment and general                                                                                         314                    839Depreciation of property, plant and equipment                                                           910                 1,548Amortisation of intangible assets                                                                                  10                      25Auditor’s remuneration                                                                                                 47                      73Other operating expenses                                                                                       4,702               10,707                                                                                                                           ————           ————Total cost of sales and administrative expenses                                                   52,275               78,336                                                                                                                           ————           ————7. Exceptional costs and non-recurring items                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Acquisition costs                                                                                                             –                    176Refinancing costs                                                                                                       120                    149Restructuring costs                                                                                                         –                    318Loss on sale of fashion hire watch assets                                                                  120                        –                                                                                                                           ————           ————                                                                                                                                   240                    643                                                                                                                           ————           ————Corporate costs represent adviser fees for all acquisitions (both share and asset purchases) that tookplace in FY20.

Refinancing costs  represent  the amortisation of arrangement and associate adviser  fees  incurred  inobtaining  the HSBC Senior Debt  in  FY19  and  FY20. Total  costs  of  £744,000  to  be  amortised  over5 years.

71

Restructuring costs comprise redundancy costs for 29 employees following the acquisition of LED Hutin FY19 and wider restructuring within the Group that took place thereafter.

In 2019 the exceptional administrative expenses include a non-recurring item of £120,000 relating toprofessional fees in connection with the refinancing of the prior year loan facility and a non-recurringitem of £120,000 relating to a loss on sale of fashion hire watch assets.

8. Staff and remuneration                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                    No.                    No.

Average number of employees (including Directors):Management and administration                                                                                  27                      49Warehouse                                                                                                                    59                      52Sales                                                                                                                             17                      31Development                                                                                                                 47                      67                                                                                                                           ————           ———— 150 199                                                                                                                           ————           ————                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Aggregate remuneration of staff (including Directors):Wages and salaries                                                                                                 3,525                 5,747Social security costs                                                                                                   275                    564Other pension costs                                                                                                    281                    250                                                                                                                           ————           ———— 4,081 6,561                                                                                                                           ————           ————9. Finance income                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Other interest receivable                                                                                              28                        3                                                                                                                           ————           ————                                                                                                                                     28                        3                                                                                                                           ————           ————10. Finance costs                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Bank interest payable                                                                                                   67                      55Other interest payable                                                                                                365                    637Interest on right-of-use assets                                                                                      73                      91                                                                                                                           ————           ————                                                                                                                                   505                    783                                                                                                                           ————           ————Other  interest  payable  represents  interest  payable  in  respect  of  the  invoice  discounting  and  supplychain facilities.

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11. Taxation                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Current taxCurrent year – UK corporation tax                                                                           1,923                 2,459Adjustments in respect of prior periods                                                                     (135)                 (374)Foreign tax on income                                                                                                    –                      13                                                                                                                           ————           ————Total current tax                                                                                                     1,788                 2,098                                                                                                                           ————           ————Deferred taxOrigination and reversal of timing differences                                                             (24)                   118Adjustment for prior periods                                                                                        (31)                    94Effect of tax rate change                                                                                                –                        8                                                                                                                           ————           ————Total deferred tax                                                                                                       (55)                  220                                                                                                                           ————           ————Total tax expense                                                                                                   1,733                 2,318                                                                                                                           ————           ————Factors affecting the charge                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Profit before taxation                                                                                               9,602               13,213                                                                                                                           ————           ————Tax at the UK corporation tax rate of 19% (2019: 19%)                                         1,824                 2,510Effects of expenses not deductible for tax purposes                                                 (116)                    48Fixed asset differences                                                                                               228                      36Adjustments to tax charge due to change in rates                                                         3                        8Adjustments to tax charge in respect of prior periods                                               (166)                 (280)Other differences                                                                                                         (40)                      –Income not taxable for tax purposes                                                                              –                      (5)Difference in foreign tax rates                                                                                        –                        1                                                                                                                           ————           ————Total tax expense                                                                                                     1,733 2,318                                                                                                                           ————           ————Factors that may affect future tax charges

In  the Spring Budget 2020,  the Government announced that  the previously enacted decrease  in  thecorporate tax rate from 19% to 17% from 1 April 2020 would no longer happen and that rates wouldremain at 19% for the foreseeable future. The new law was substantively enacted post year end by aresolution under the Provisional Collection of Taxes Act 1968 on 17 March 2020. As the new law wassubstantively enacted pre year end, the impact of the change to 19% has been reflected in the HistoricalFinancial Information for the year ended 31 March 2020.

12. Earnings per share

Basic earnings per share is calculated by dividing the net income for the year attributable to ordinaryequity holders after tax by the weighted average number of ordinary shares outstanding during the year.

Diluted  earnings  per  share  is  calculated with  reference  to  the weighted  average  number  of  sharesadjusted for the impact of dilutive instruments in issue. For the purposes of this calculation an estimatehas been made for the share price in order to calculate the number of dilutive share options.

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The basic and diluted calculations are based on the following:

                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Profit for the year after tax                                                                                       7,869               10,895                                                                                                                           ————           ————                                                                                                                                    No.                    No.Weighted average number of shares for the purposes of

basic earnings per share                                                                           110,005,000      110,005,000Weighted average dilutive effect of conditional share awards                            909,791          1,256,158                                                                                                                       —————       —————Weighted average number of shares for the purposes of

diluted earnings per share                                                                         110,914,791      111,261,158                                                                                                                       —————       —————                                                                                                                                       £                        £Basic profit per share                                                                                                 0.07                   0.10Diluted profit per share                                                                                              0.07                   0.10                                                                                                                       —————       —————13. Goodwill and other intangible assets                                                                    Domain Customer name Trademarks relationships Goodwill Total                                                                £’000              £’000                £’000            £’000              £’000

CostAt 1 July 2018                                              69                     –                       –               283                 352Arising on business combinations                  –                     –                       –               330                 330Additions                                                       55                   50                       –                   –                 105                                                           ————        ————          ————      ————        ————At 31 March 2019                                       124                   50                       –               613                 787                                                           ————        ————          ————      ————        ————Arising on business combinations                  –                     –                   419              601              1,020Additions                                                         –                   15                       –                   –                   15                                                           ————        ————          ————      ————        ————At 31 March 2020                                       124                   65                   419           1,214              1,822                                                           ————        ————          ————      ————        ————Accumulated amortisationAt 1 July 2018                                                9                     –                       –                   –                     9Amortisation charged in the period                7                     3                       –                   –                   10                                                           ————        ————          ————      ————        ————At 31 March 2019                                         16                     3                       –                   –                   19                                                           ————        ————          ————      ————        ————Amortisation charged in the year                 12                     6                       7                   –                   25                                                           ————        ————          ————      ————        ————At 31 March 2020                                         28                     9                       7                   –                   44                                                           ————        ————          ————      ————        ————Carrying amountAt 1 July 2018                                              60                     –                       –               283                 343                                                           ————        ————          ————      ————        ————At 31 March 2019                                       108                   47                       –               613                 768                                                           ————        ————          ————      ————        ————At 31 March 2020                                         96                   56                   412           1,214              1,778                                                           ————        ————          ————      ————        ————Goodwill arises on acquisitions where the fair value of the consideration given for the business exceedsthe fair value of the assets acquired and liabilities assumed.

74

Following acquisition of a business, the directors identify the individual Cash Generating Units (CGUs)acquired and, where possible, allocate the underlying assets acquired and liabilities assumed to eachof those CGUs. The carrying value of goodwill has arisen following the acquisition of subsidiary entities,where  the  trade  and  assets  have  subsequently  been  hived  up  into  this  company,  and  the  relatedinvestment balance transferred to goodwill. The carrying value of goodwill is allocated to the followingcash generating units:

                                                                                                                                                          £’000

Lighting                                                                                                                                                 159Batteries                                                                                                                                               492Vaping                                                                                                                                                  121Sports Nutrition & Wellness                                                                                                                   12Branded Household Consumer Goods                                                                                                430                                                                                                                                                    ————                                                                                                                                                          1,214                                                                                                                                                    ————Goodwill arising  in  the year  related  to  the acquisition of Provider Distribution Limited, Holding EsserAffairs B.V. and its subsidiary AGP Trading B.V. and Monocore Limited. See note 26 for further detail.Goodwill arising in 2019 related to the acquisition of PowerQuick Limited, Vape Importers Limited andSub OHM Juice Limited that were hived up into Supreme Imports Ltd.

Impairment testing of goodwill is performed at least annually by reference to value in use calculations,in  line with  the requirements of  IAS 36. These calculations show no reasonably possible scenario  inwhich any of the goodwill balances could be impaired as at the date of transition, 31 March 2019, or 31March 2020. There were no charges for impairment of goodwill in 2020 (2019: nil).

14. Property, plant and equipment                                                                 Plant and Fixtures Motor Fashion machinery and fittings vehicles hire assets Total                                                                £’000              £’000              £’000              £’000              £’000

Cost or valuationAt 1 July 2018                                         1,736                 416                     –              1,487              3,639Additions                                                     800                   50                   32                     –                 882Disposals                                                     (23)                   –                     –               (181)              (204)                                                           ————        ————        ————        ————        ————At 31 March 2019                                    2,513                 466                   32              1,306              4,317                                                           ————        ————        ————        ————        ————Additions                                                  1,342                 301                   12                     –              1,655Acquisition of subsidiary                               15                     2                     7                     –                   24                                                           ————        ————        ————        ————        ————At 31 March 2020                                    3,870                 769                   51              1,306              5,996                                                           ————        ————        ————        ————        ————Depreciation and impairmentAt 1 July 2018                                            428                 230                     –                 330                 988Depreciation charged in the period            369                   84                     6                   74                 533Eliminated on disposal                                   –                     –                     –                 (12)                (12)                                                           ————        ————        ————        ————        ————At 31 March 2019                                       797                 314                     6                 392              1,509                                                           ————        ————        ————        ————        ————Depreciation charged in the year               815                 135                   10                   69              1,029                                                           ————        ————        ————        ————        ————At 31 March 2020                                    1,612                 449                   16                 461              2,538                                                           ————        ————        ————        ————        ————Carrying amountAt 1 July 2018                                         1,308                 186                     –              1,157              2,651                                                           ————        ————        ————        ————        ————At 31 March 2019                                    1,716                 152                   26                 914              2,808                                                           ————        ————        ————        ————        ————At 31 March 2020                                    2,258                 320                   35                 845              3,458                                                           ————        ————        ————        ————        ————The depreciation charge for the year has been included in Administrative expenses in the Statement ofComprehensive Income.

75

15. Investments                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

At beginning of period/year                                                                                           60                      60Amounts written off                                                                                                         –                    (60)On acquisition of subsidiaries                                                                                         –                        7                                                                                                                           ————           ————At end of period/year                                                                                                    60                        7                                                                                                                           ————           ————The balance of £7,000 arising on acquisition of subsidiaries relates to shares held in public entities, bythe acquired subsidiary, who are listed on the stock market.

The  Company  owns  20%  of  the  share  capital  of  Elena  Dolce  Limited,  with  a  registered  office  of111 Deansgate, Manchester, M3 2BQ. This was written off in the year.

In  addition,  at  31  March  2020  the  Company  owned  100%  of  the  following  subsidiaries,  which  areincorporated in England and Wales:

•         Vape Nation Limited

•         Battery Force Limited

•         Saira Shoes Limited

•         PowerQuick Limited

•         Sub OHM Juice Limited

•         Supreme 88 Limited (formerly Vape Importers Limited)

•         Holding Esser Affairs B.V.1

•         AGP Trading B.V.1

•         SI Jersey Limited2

The  registered office of each subsidiary, unless stated,  is 4 Beacon Road, Ashburton Park, TraffordPark, Manchester, M17 1AF.

1      The registered office of these entities is Vanadiumweg 13, 3812 PX, Armersfoort, Netherlands.

2      The registered office of this entity is 11 Bath Street, St Helier, Jersey, JE4 8UT.

16. Deferred tax

Deferred tax consists of the following timing differences                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Excess of depreciation over taxable allowances                                                        (90)                 (221)Short term timing differences                                                                                      117                      25Tax losses carried forward                                                                                              4                        5                                                                                                                           ————           ————                                                                                                                                     31                  (191)                                                                                                                           ————           ————

76

Movement in deferred tax in the year                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Balance brought forward                                                                                             (42)                    31Credited/(charged) to profit or loss                                                                               55                  (220)Arising on acquisitions                                                                                                    –                      (3)Transfer                                                                                                                         18                        1                                                                                                                           ————           ————Balance carried forward                                                                                                31                  (191)                                                                                                                           ————           ————The Directors consider that the deferred tax assets in respect of timing differences and depreciation inexcess  of  capital  allowances  are  recoverable  based  on  the  forecast  future  taxable  profits  of  theCompany.

17. Inventories                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Goods for resale                                                                                                    13,549               12,282Raw materials                                                                                                          1,484                 2,176                                                                                                                           ————           ————                                                                                                                              15,033               14,458                                                                                                                           ————           ————The Directors believe that the replacement value of inventories at would not be materially different thanbook value.

Inventories at 31 March 2020 are stated after provisions for impairment of £96,000 (2019: £96,000).

18. Trade and other receivables                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Trade receivables                                                                                                  10,748               13,588Amounts owed by related parties                                                                            1,617                 1,790Directors loan account                                                                                                672                        –Other receivables                                                                                                        230                    405Called up share capital not paid                                                                                     1                        1Prepayments                                                                                                               773                    955                                                                                                                           ————           ————                                                                                                                              14,041               16,739                                                                                                                           ————           ————The Directors believe that the carrying value of trade and other receivables represents their fair value.In determining the recoverability of trade receivables, the Company considers any change in the creditquality of the receivable from the date credit was granted up to the reporting date.

The movement in provisions for impairment are shown below:

                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Balance at the beginning of the period/year                                                                 53                      52Charged to the statement of comprehensive income                                                   71                      14Utilisation of provision                                                                                                 (72)                   (40)                                                                                                                           ————           ————Balance at the end of the period/year                                                                          52                      26                                                                                                                           ————           ————

77

Trade receivables disclosed above include amounts (see below for aged analysis) which are past dueat  the  reporting date but  against which  the Company has not  recognised an allowance  for  doubtfulreceivables because there has not been a significant change in credit quality and the amounts are stillconsidered recoverable.

Ageing of past due but not impaired receivables

                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Current                                                                                                                   10,663               13,892Less than 30 days                                                                                                          –                        –31 – 60 days                                                                                                                 66                  (285)61 – 90 days                                                                                                                  (3)                     (4)90 days +                                                                                                                      74                      11Less provisions for impairment                                                                                    (52)                   (26)                                                                                                                           ————           ————                                                                                                                              10,748               13,588                                                                                                                           ————           ————In determining the recoverability of a trade receivable the Company considers any change in the creditquality of the trade receivable from the date credit was initially granted up to the reporting date. Theconcentration  of  credit  risk  is  limited  due  to  the  customer  base  being  large  and  unrelated.  Creditinsurance is also in place.

Details on the Company’s credit risk management policies are shown in Note 23. The Company doesnot hold any collateral as security for its trade and other receivables.

19. Cash and cash equivalents                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Cash at bank                                                                                                           1,694                 6,718                                                                                                                           ————           ————20. Trade and other payables                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Trade payables                                                                                                        4,160                 6,907Accruals and deferred income                                                                                 2,645                 1,618Other tax and social security                                                                                      625                 1,541Other payables                                                                                                               7                      27Directors loan account                                                                                                    –                        2Amounts owed to related parties                                                                                  74                 3,392Deferred consideration                                                                                                   –                    195                                                                                                                           ————           ————                                                                                                                                7,511               13,682                                                                                                                           ————           ————Trade payables principally consist of amounts outstanding for trade purchases and ongoing costs. Theyare non-interest bearing and are normally settled on 30 to 60 day terms.

The Directors consider that the carrying value of trade and other payables approximates their fair value.Trade  and  other  payables  are  denominated  in  Sterling,  Euros  and  US  Dollars.  Supreme  Ltd  hasfinancial  risk  management  policies  in  place  to  ensure  that  all  payables  are  paid  within  the  credittimeframe and no interest has been charged by any suppliers as a result of late payment of invoicesduring the period.

78

21. Borrowings                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

CurrentBank overdraft                                                                                                            151                        –Bank loans                                                                                                               3,125                 5,310Other loans                                                                                                              1,035                 1,378IFRS 16 lease liability (Note 22)                                                                                 488                    493                                                                                                                           ————           ————                                                                                                                                4,799                 7,181                                                                                                                           ————           ————Non-currentBank term loan                                                                                                      16,419               16,317IFRS 16 lease liability (Note 22)                                                                              1,589                 1,096                                                                                                                           ————           ————                                                                                                                              18,008               17,413                                                                                                                           ————           ————Total borrowings                                                                                                    22,807               24,594                                                                                                                           ————           ————The earliest that the lenders of the above borrowings require repayment is as follows:

                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

In less than one year                                                                                               4,799                 7,181Between two and five years                                                                                  18,008               17,413In more than five years                                                                                                   –                        –                                                                                                                           ————           ————                                                                                                                              22,807               24,594                                                                                                                           ————           ————The Company  is  funded  by  external  banking  facilities  provided  by HSBC. Current  bank  borrowingsincludes invoice discounting facilities, which are secured by an assignment of, and fixed charge overthe trade debtors of Supreme Imports Limited. There is also an amount of £nil at 31 March 2020 (2019:£151,000) due under a bank overdraft. Furthermore,  current bank borrowings  include an amount of£1,378,000 at 31 March 2020, (2019: £1,147,000) due under a supply chain facility which is secured byfixed and floating charges over all assets of the company. This facility is denominated in US Dollars.

The total facilities available were a £8,500,000 invoice discounting facility (repayable on demand) anda  £4.5m  supply  chain  facility  (renewed  each  year).  Therefore  undrawn  but  committed  facilities  at31 March 2020 were £8,722,000 and £3,122,000 respectively (2019: £8,612,000 and £3,353,000).

The  supply  chain  facility  is  utilised  to  provide  short  term  cash  flow  to  settle  liabilities  arising  out  ofpurchases made in the normal course of business. The amount advanced takes into consideration thecash requirements of the Company and the working capital cycle.

The bank term loan is made up of £12,500,000 repayable in quarterly instalments of £781,000 over a5  year  term,  and  £7,500,000  repaid  on  maturity.  In  March  2020,  the  facility  was  increased  by£6,000,000, which is repayable in quarterly instalments of £545,000 per quarter over the 5 year term.Interest is charged at a rate of 5% over LIBOR. The bank loan is secured by way of a fixed and floatingcharge over all assets.

There are three principal covenants attached to the Senior Facilities. These are tested quarterly andinclude gross leverage, cash flow and interest cover.

79

22. Leases

Amounts recognised in the Statement of Financial Position

The balance sheet shows the following amounts relating to leases:

Right-of-use assets                                                                                                                         £’000

Balance at 1 July 2018                                                                                                                        923New leases recognised in the period                                                                                                1,468Depreciation charge for the period                                                                                                     (377)                                                                                                                                                    ————Balance at 31 March 2019                                                                                                                2,014Depreciation charge for the year                                                                                                        (519)                                                                                                                                                    ————Balance at 31 March 2020                                                                                                                1,495                                                                                                                                                    ————The net book value of the right of use assets is made up as follows:

                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Buildings                                                                                                                  1,859                 1,414Cars                                                                                                                            155                      81                                                                                                                           ————           ————                                                                                                                                2,014                 1,495                                                                                                                           ————           ————                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000Lease liabilitiesMaturity analysis – contractual undiscounted cash flowsLess than one year                                                                                                     579                    559More than one year, less than two years                                                                   559                    559More than two years, less than three years                                                               559                    535More than three years, less than four years                                                               535                      60More than four years, less than five years                                                                   60                        –More than five years                                                                                                       –                        –                                                                                                                           ————           ————Total undiscounted lease liabilities at year end                                                       2,292                 1,713Finance costs                                                                                                            (215)                 (124)                                                                                                                           ————           ————Total discounted lease liabilities at year end                                                           2,077                 1,589                                                                                                                           ————           ————Lease liabilities included in the statement of financial positionCurrent                                                                                                                        488                    493Non-current                                                                                                              1,589                 1,096                                                                                                                           ————           ————                                                                                                                                2,077                 1,589                                                                                                                           ————           ————

Amounts recognised in the Consolidated Statement of Comprehensive Income

The Consolidated Statement of Comprehensive Income shows the following amounts relating to leases:

                                                                                                                                          9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                                £’000                 £’000

Depreciation charge – Buildings                                                                                 321                    445Depreciation charge – Cars                                                                                          56                      74                                                                                                                           ————           ————                                                                                                                                   377                    519                                                                                                                           ————           ————Interest expense (within finance expense)                                                                   73                      91                                                                                                                           ————           ————

80

23. Financial instruments

The Company is exposed to the risks that arise from its financial instruments. The policies for managingthose  risks and  the methods  to measure  them are described  in Notes 2 and 3. Further quantitativeinformation  in  respect  of  these  risks  is  presented  below  and  throughout  this  Historical  FinancialInformation.

23.1 Capital risk management

Details of the Company’s capital are shown in Note 24, as well as in the Statement of Changesin Equity.

23.2 Market risk

Competitive pressures  remain a principal  risk  for  the Company. The  risk  is managed  throughfocus  on  quality  of  product  and  service  levels,  coupled with  continuous  development  of  newproducts to offer uniqueness to the customer. Furthermore, the Company’s focus on offering itscustomers a branded product range provides some protection to its competitive position in themarket. Stock obsolescence risk is managed through closely monitoring slow moving lines andprompt action  to manage such  lines  through  the various distribution channels available  to  theCompany.

In addition, the Company’s operations expose it to a variety of financial risks that include pricerisk, credit risk, liquidity risk, foreign currency risk and interest rate cash flow risk. The Companyhas  in  place  a  risk  management  programme  that  seeks  to  limit  the  adverse  effects  on  thefinancial  performance  of  the  Company  by  regularly  monitoring  the  financial  risks  referred  toabove.

Given the size of the Company, the Directors have not delegated the responsibility of monitoringfinancial risk management to a sub-committee of the board. The policies set by the Board areimplemented by the Company’s finance department.

23.3 Credit risk

The Company’s sales are primarily made with credit terms of between 0 and 30 days, exposingthe Company to the risk of non-payment by customers. The Company has implemented policiesthat require appropriate credit checks on potential customers before sales are made. The amountof exposure to any individual counterparty is subject to a limit, which is reassessed regularly bythe board.  In  addition,  the Company maintains a  suitable  level  of  credit  insurance against  itsdebtor book. The maximum exposure to credit risk is £2,500 per individual customer, being theinsurance excess.

An analysis of past due but not impaired trade receivables is given in Note 18.

23.4 Liquidity risk management

The Company is funded by external banking facilities provided by HSBC. Within these facilities,the  Company  actively  maintains  a  mixture  of  long-term  and  short-term  debt  finance  that  isdesigned  to  ensure  the  Company  has  sufficient  available  funds  for  operations  and  plannedexpansions.  This  is  monitored  on  a  monthly  basis,  including  re-forecasts  of  the  borrowingsrequired.

23.5 Foreign currency risk management

The Company’s activities expose it to the financial risks of changes in foreign currency exchangerates. The Company’s exposure to foreign currency risk is partially hedged by virtue of invoicinga proportion of its turnover in US Dollars. When necessary, the Company uses foreign exchangeforward contracts to further mitigate this exposure.

81

The following is a note of the assets and liabilities denominated at each period end in US dollars:

                                                                                                                                    As at As at 31 March 31 March 2019 2020                                                                                                                      £’000                 £’000

Trade receivables                                                                                             444                    266Net cash and overdrafts                                                                                   957                 1,370Supply chain facility                                                                                      (1,147)              (1,378)Trade payables                                                                                                 472                    (89)

                                                                                                                           ————           ————                                                                                                                         726                    169

                                                                                                                           ————           ————The  effect  of  a  20% strengthening  of  Pound  Sterling  at  31  March  2020  on  the  foreigndenominated financial  instruments carried at that date would, all variables held constant, haveresulted in a decrease to total comprehensive income for the year and a decrease to net assetsof £28,000,  (2019: £121,000 decrease). A 20% weakening of  the exchange  rate on  the samebasis, would have resulted in an increase to total comprehensive income and an increase to netassets of £42,000, (2019: £181,000 increase).

The following is a note of the assets and liabilities denominated at each period end in Euros:

                                                                                                                                    As at As at 31 March 31 March 2019 2020                                                                                                                      £’000                 £’000

Inventory                                                                                                               –                    289Trade receivables                                                                                             253                    483Net cash and overdrafts                                                                                       1                    322Trade payables                                                                                                (406)                 (464)

                                                                                                                           ————           ————                                                                                                                        (152)                  630

                                                                                                                           ————           ————The  effect  of  a  20% strengthening  of  Pound  Sterling  at  31  March  2020  on  the  foreigndenominated financial  instruments carried at that date would, all variables held constant, haveresulted in a decrease to total comprehensive income for the year and a decrease to net assetsof  £105,000,  (2019:  £25,000  increase). A 20% weakening of  the exchange  rate on  the  samebasis, would have resulted in an increase to total comprehensive income and an increase to netassets of £158,000, (2019: £38,000 decrease).

Derivative financial instruments – Forward contracts

The Company mitigates  the exchange  rate  risk  for certain  foreign currency  trade debtors andcreditors by entering into forward currency contracts. The Company’s forex policy is to purchaseforward  contracts  to mitigate  changes  in  spot  rates,  based  on  the  timing  of  purchases  to  bemade.  Management  forecast  the  timing  of  purchases  and  make  assumptions  relating  to  theexchange rate at which the Company costs its products and take out forward contracts to mitigatefluctuations to an acceptable level. At 31 March 2020, the outstanding contracts mature between1 and 12 months of the year end, (2019: 1 and 12 months). At 31 March 2020 the Company wascommitted to buy $1,726,000 (2019: $12,709,605) in the next financial year.

The forward currency contracts are measured at fair value using the relevant exchange rates forGBP:USD  and  GBP:EUR.  The  fair  value  of  the  contracts  at  31  March  2020  is  an  asset  of£209,000, (2019: £nil). During the year ended 31 March 2020, a gain of £209,000 (2019: £nil)was  recognised  in  cost  of  sales  for  changes  in  the  fair  value of  the  forward  foreign  currencycontracts.

Forward currency contracts are valued using level 2 inputs. The valuations are calculated usingthe year end exchange rates for the relevant currencies which are observable quoted values atthe year-end dates. Valuations are determined using the hypothetical derivative method whichvalues the contracts based on the changes in the future cashflows based on the change in valueof the underlying derivative.

82

23.6 Interest rate cash flow risk

The  Company’s  interest  bearing  liabilities  relate  to  its  variable  rate  banking  facilities.  TheCompany has a policy of keeping the rates associated with funding under review in order to reactto any adverse changes in the marketplace that would impact on the interest rates in place. Theeffect  of  a  1%  increase  in  interest  rates would  have  resulted  in  a  decrease  in  net  assets  of£230,000 (2019: £207,000 decrease).

23.7 Price risk

The Company’s profitability is affected by price fluctuations in the sourcing of its products. TheCompany continually monitors the price and availability of materials but the costs of managingthe exposure to price risk exceed any potential benefits given the extensive range of productsand suppliers. The Directors will revisit the appropriateness of this policy should the Company’soperations change in size or nature.

23.8 Maturity of financial assets and liabilities

All of  the Company’s non-derivative  financial  liabilities and  its  financial assets at  the  reportingdate  are  either  payable  or  receivable  within  one  year,  except  for  borrowings  as  disclosed  inNote 21.

23.9 Summary of financial assets and liabilities by category

The carrying amount of  financial assets and  liabilities  recognised may also be categorised asfollows:                                                                                                                                    As at As at 31 March 31 March 2019 2020                                                                                                                      £’000                 £’000Financial assetsFinancial assets measured at amortised costTrade and other receivables                                                                        13,268               15,784Cash and cash equivalents                                                                           1,694                 6,718

                                                                                                                           ————           ————                                                                                                                    14,962               22,502Financial liabilitiesFinancial liabilities measured at amortised costNon-current:Borrowings                                                                                                 (18,008)            (17,413)Current:Borrowings                                                                                                   (4,799)              (7,181)Trade and other payables                                                                            (4,241)            (10,523)Accruals                                                                                                        (2,645)              (1,618)

                                                                                                                           ————           ————                                                                                                                   (29,693)            (36,735)Financial liabilities measured at fair value through profit and lossDerivative financial instruments                                                                            –                    209

                                                                                                                           ————           ————                                                                                                                             –                    209

                                                                                                                           ————           ————Net financial assets and liabilities                                                              (14,731)            (14,024)Non-financial assets and liabilitiesPlant, property and equipment                                                                      2,808                 3,458Right of use assets                                                                                        2,014                 1,495Goodwill and other intangible assets                                                               768                 1,778Investments                                                                                                        60                        7Inventory                                                                                                      15,033               14,458Prepayments and accrued income                                                                   773                    955Deferred tax asset / (liability)                                                                              31                  (191)Other taxation and social security                                                                   (625)              (1,541)Income tax recoverable                                                                                        –                        9Income tax payable                                                                                      (1,953)              (2,340)

                                                                                                                           ————           ————                                                                                                                    18,909               18,088

                                                                                                                           ————           ————Total equity                                                                                                    4,178                 4,064

                                                                                                                           ————           ————

83

24. Share capital                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                       £                        £

A Ordinary shares of £0.10 each                                                                      8,250,375          8,250,375B Ordinary shares of £0.10 each                                                                     2,750,125          2,750,125                                                                                                                       —————       —————                                                                                                                       11,000,500        11,000,500                                                                                                                       —————       —————Number of shares authorised and in issue                                                                                                                                                As at As at 31 March 31 March 2019 2020                                                                                                                                    No.                    No.

A Ordinary shares of £0.10 each                                                                    82,503,750        82,503,750B Ordinary shares of £0.10 each                                                                   27,501,250        27,501,250                                                                                                                       —————       —————                                                                                                                     110,005,000      110,005,000                                                                                                                       —————       —————Rights of share capital

The A Ordinary shares have attached to them full voting, dividend and capital distribution rights. Theydo not confer any rights or redemption.

The  Ordinary  B  shares  are  entitled  to  an  initial  dividend  of  £16,500,000.  In  all  other  aspects  theA Ordinary and B Ordinary shares share the same rights.

Post year-end, on 2 September 2020, the two share classes were designated as “Ordinary shares”.

Dividends

Dividends  of  £11,000,000  (2019:  £16,288,000)  were  declared  in  the  year.  This  amounted  to£0.10 per share (2019: £0.15).

25. Share based payments

On the 14 September 2018, the Company implemented an Enterprise Management Incentive Scheme(EMI Scheme). This was granted  to  employees  to  acquire  shares  in  the Company  for  a  number  ofordinary shares of 10p each at the exercise price at the option of the employee. These options may notbe  granted  unless  a  relevant  event  attached  to  the  option  has  occurred.  These  options  vestedimmediately and will expire after 10 years from grant date.

These  option  were  fairly  valued  upon  a  valuation  of  the  entity  that  had  been  performed  by  anindependent expert. This was chosen as  the Company  is not a  listed entity and  therefore  is not anobservable market price to monitor. The independent expert was Grant Thornton UK LLP.

                                                                                Weighted Weighted average average exercise exercise price price 2020 2020 2019 2019 (pence) Number (pence) Number

Outstanding at the beginning of theperiod/year                                                          0.38          2,174,120                        –                        –

Granted during the period/year                                    –                        –                   0.38          2,174,120                                                                        ————           ————           ————           ————Outstanding at the end of the period/year              0.38          2,174,120                   0.38          2,174,120                                                                        ————           ————           ————           ————The profit and loss expense that has been recognised in the current year is £nil (2019: £322,000) andincluded within administrative expenses.

84

26. Business combinations

Acquisition of Provider Distribution Limited

On 28 February 2020, the Company purchased 100% share capital of Provider Distribution Limited forconsideration of £3,544,000 excluding costs of acquisition of £43,000.

Recognised amounts of identifiable assets acquired and liabilities assumed                                                                                                                                        Fair value Book value adjustment Fair value                                                                                                       £’000                 £’000                 £’000

Fixed assetsTangible assets                                                                                   24                        –                      24Customer relationships                                                                         –                    419                    419Investments                                                                                           7                        –                        7                                                                                                 ————           ————           ————                                                                                                            31 419 450Current assetsInventory                                                                                         1,510                        –                 1,510Debtors due within one year                                                          1,647                        –                 1,647Cash at bank and in hand                                                                 609                        –                    609                                                                                                 ————           ————           ————                                                                                                       3,766 – 3,766                                                                                                 ————           ————           ————Total assets                                                                                   3,797 419 4,216CreditorsDue within one year                                                                      (1,099)                      –               (1,099)Deferred tax                                                                                         (3)                      –                      (3)                                                                                                 ————           ————           ————                                                                                                      (1,102) – (1,102)                                                                                                 ————           ————           ————Total identifiable net assets                                                        2,695 419 3,114Goodwill                                                                                                                                                430                                                                                                                                                    ————Total purchase consideration                                                                                                         3,544                                                                                                                                                    ————ConsiderationCash                                                                                                                                                  3,350Deferred consideration                                                                                                                         194                                                                                                                                                    ————Total purchase consideration                                                                                                         3,544                                                                                                                                                    ————Cash outflow on acquisitionPurchase consideration settled in cash, as above                                                                           3,544Less: cash and cash equivalents acquired                                                                                         (609)                                                                                                                                                    ————Net cash outflow on acquisition                                                                                                    2,935                                                                                                                                                    ————Following  an  extensive  purchase  price  allocation  exercise  the  company  considers  customerrelationships to be the primary asset acquired. The multi-period excess earnings method was used inorder  to  value  the  customer  relationships.  The multi-period  excess  earnings method  considers  thepresent value of net cash flows expected to be generated by the customer relationships, by excludingany cash flows related to contributory assets. There were no further intangible assets identified and assuch the remaining consideration is represented as goodwill.

The  deferred  consideration  was  due  for  payment  on  finalisation  of  the  completion  accounts,  whichoccurred shortly after the year end.

The revenue from Provider Distribution Limited included in the Statement of Comprehensive Income for2020 was £1,477,000. Provider Distribution Limited also contributed profit of £72,000 over  the sameperiod.

If the acquisition had occurred on 1 April 2019, consolidated pro-forma revenue and profit for the yearended 31 March 2020 would have increased by £11,821,000 and £388,000 respectively.

85

Acquisition of AGP Group

On 1 November 2019, Supreme 88 Limited purchased 100% share capital of Holding Esser Affairs B.V.and  its  subsidiary AGP Trading B.V.  for  consideration of £976,000. There were no acquisition costsincurred.

Recognised amounts of identifiable assets acquired and liabilities assumed                                                                                                                                        Fair value Book value adjustment Fair value                                                                                                       £’000                 £’000                 £’000

Current assetsInventory                                                                                            378                        –                    378Debtors due within one year                                                             313                        –                    313Cash at bank and in hand                                                                 169                        –                    169                                                                                                 ————           ————           ————Total assets                                                                                      860 – 860CreditorsDue within one year                                                                           (43)                      –                    (43)                                                                                                 ————           ————           ————Total identifiable net assets                                                           817 – 817Goodwill                                                                                                                                                159                                                                                                                                                    ————Total purchase consideration                                                                                                            976                                                                                                                                                    ————ConsiderationCash                                                                                                                                                     976                                                                                                                                                    ————Total purchase consideration                                                                                                            976                                                                                                                                                    ————Cash outflow on acquisitionPurchase consideration settled in cash, as above                                                                              976Less: cash and cash equivalents acquired                                                                                         (169)                                                                                                                                                    ————Net cash outflow on acquisition                                                                                                       807                                                                                                                                                    ————The  revenue  from  Holding  Esser Affairs  B.V.  and  its  subsidiary AGP  Trading  B.V.  included  in  theStatement  of  Comprehensive  Income  for  2019  was  £599,000.  Holding  Esser  Affairs  B.V.  and  itssubsidiary AGP Trading B.V. also contributed profit of £58,000 over the same period.

If the acquisition had occurred on 1 April 2019, consolidated pro-forma revenue and profit for the yearended 31 March 2020 would have increased by £718,000 and £9,000 respectively.

Acquisition of Monocore Limited

In addition, there was a further acquisition of the trade and assets of Monocore Limited for £98,000,settled in cash, which created an additional £12,000 of goodwill.

If all acquisitions had occurred on 1 April 2019, consolidated pro-forma revenue and profit for the yearended  31  March  2020  would  have  increased  by  £12,539,000,  to  £104,868,000,  and  £397,000,  to£11,292,000, respectively.

27. Ultimate controlling party

The Company is ultimately controlled by Sandy Chadha by virtue of his majority shareholding.

28. Other financial commitments

See note 23.5 or details of the financial commitments under US dollar forward exchange contracts.

86

29. Related party transactions

29.1 Remuneration of key personnel

Remuneration of key management personnel, considered  to be  the Directors of  the Companyand members of the senior management team is as follows:

                                                                                                                               9 month Period Ended Year Ended 31 March 31 March 2019 2020                                                                                                                      £’000                 £’000

Short-term employee benefits                                                                          372                    560Post-employment benefits                                                                                    3                        6

                                                                                                                           ————           ————Total compensation                                                                                          375                    566

                                                                                                                           ————           ————29.2 Transactions and balances with key personnel

                                                                                                                                    As at As at 31 March 31 March 2019 2020                                                                                                                      £’000                 £’000

Loan balances with Directors:Balance outstanding from director                                                                    672                      (2)

                                                                                                                           ————           ————29.3 Transactions and balances with related companies and businesses

                                                                                                                               9 month Period Ended/ Year Ended/ As at As at 31 March 31 March 2019 2020                                                                                                                      £’000                 £’000

Transactions with related companies:Rent paid to Chadha Properties Limited                                                          180                    180Loans provided to Nash Peters Limited                                                             31                    174

                                                                                                                           ————           ————Balances with related companies:Amounts owed by Nash Peters Limited                                                        1,617                 1,790Amounts owed to SI Jersey Limited                                                                 (74)                      –Amounts owed to Supreme 8 Limited                                                                  –               (3,392)

                                                                                                                           ————           ————The above companies are related due to common control and Directors.

Amounts  owed  by  Nash  Peters  are  due  for  repayment  on  demand  and  interest  is  charged  on  theoutstanding balance at a rate of 5%.

Included within creditors is a balance of £Nil (2019 - £74,000) owed to SI Jersey Limited.

Amounts  owed  to Supreme 8  Limited,  a minority  shareholder,  are  for  a  loan  due  for  repayment  ondemand and interest is charged on the outstanding balance at a rate of 3%.

87

30. Analysis and reconciliation of net debt                                                         1 July Other non- 31 March 2018 Acquisitions cash changes Cashflow 2019                                                    £’000                 £’000                 £’000                 £’000                 £’000

Cash at bank and in hand           1,342                        –                        –                    352                 1,694Current borrowings                    (8,327)                      –                  (682)               4,210               (4,799)Non-current borrowings                (730)                      –                  (859)            (16,419)            (18,008)                                              ————           ————           ————           ————           ————Net debt                                     (7,715)                      –               (1,541)            (11,857)            (21,113)                                              ————           ————           ————           ————           ———— 1 April Other non- 31 March 2019 Acquisitions cash changes Cashflow 2020                                                    £’000                 £’000                 £’000                 £’000                 £’000

Cash at bank and in hand           1,694                        –                    (30)               5,054                 6,718Current borrowings                    (4,799)                      –                 2,557               (4,939)              (7,181)Non-current borrowings           (18,008)                      –                    595                        –             (17,413)                                              ————           ————           ————           ————           ————Net debt                                    (21,113)                      –                 3,122                    115             (17,876)                                              ————           ————           ————           ————           ————31. Post balance date events

Following the year end, Supreme Imports Limited acquired 100% of the share capital of GT DivisionsLimited  for  consideration of  £1,071,000. The book value of  the assets acquired was £121,000. Thecompany is in the process of performing a detailed PPA exercise including calculation of the fair valuesof the assets acquired following which the intangible asset of £950,000 will be allocated amongst theacquired intangibles, expected to be brand, customer relationships, other intangibles, and goodwill.

On  22  October  2020,  an  accident  took  place  in  the  manufacturing  facility  at  VN  Labs  Limited,  asubsidiary  of  the  Company,  that  resulted  in  a  machine  operator  being  injured.  The  Companyimmediately contacted the Health & Safety Executive (Britain’s national regulator for workplace health& safety) who are now undertaking an  investigation. The Company continues  to make all  resourcesavailable to the HSE and will co-operate until the matter is concluded. There is not expected to be anymaterial financial impact on the Company.

On 28 October 2020 the Company reregistered as a public company, under the name of Supreme plc.

32. Reconciliation from UK GAAP to IFRS

From 1 July 2018 the Company has adopted International Financial Reporting Standards (IFRS) in thepreparation of this Historical Financial Information, other than as noted under ‘Basis of Preparation’ inNote 1. The main items contributing to the change in financial information compared with that reportedunder UK GAAP as at  the  transition date are  shown below. There were no other  accounting policychanges other than the impact of the below items.

IFRS 16 – Leases

As explained  in accounting policy 2.9  the Company has adopted  IFRS 16. This has  resulted  in  therecognition of a right of use asset and liability on the statement of financial position. The statement ofcomprehensive income has been adjusted to remove the rent expense and replace it with depreciationcharged on the right of use asset and interest accrued on the right of use liability.

IFRS 3 – Business Combinations

In accordance with the requirements of IFRS 3, Business Combinations, goodwill generated as part ofan  acquisition  is  not  amortised,  instead  being  reviewed  annually  for  indicators  of  impairment.Subsequently, the net book value of goodwill is frozen as at the value at 1 July 2018.

The  figures  included  as  previously  reported  have  been  re-presented  to  better  reflect  the  nature  ofcertain items within the financial statements as follows:

IAS 12 – Income taxes

In accordance with IAS 12 deferred tax assets are disclosed as non-current.

88

Reclasses

The Company  has  adjusted  certain  costs  which  did  not  directly  relate  to  the  cost  of  product  to  bepresented in administration expenses rather than cost of sales.

STATEMENT OF CASH FLOWS

As  a  result  of  IFRS  16  lease  payments,  which  were  previously  recorded  in  the  statement  ofcomprehensive  income  as  a  rent  expense,  are  now  shown  on  the  statement  of  cash  flows  asdepreciation and finance costs within net cash from operations, and  lease payments within net cashused in financing activities.

There are no other material differences between the cashflow statement presented under IFRS and thatpresented under UK GAAP.

STATEMENT OF COMPREHENSIVE INCOME RECONCILIATIONS                                                              As previously reported Under IFRS 9 month 9 month Period Period Ended Ended 31 March 31 March 2019 IFRS 16 IFRS 3 Reclasses 2019                                                                    £’000             £’000             £’000             £’000             £’000

Revenue                                                    62,354                   –                    –                    –           62,354Cost of sales                                            (45,414)                  –                    –                546         (44,868)                                                               ————       ————       ————       ————       ————Gross profit                                              16,940                   –                    –                546           17,486Administration expenses                            (6,918)               (13)                70              (546)          (7,407)                                                               ————       ————       ————       ————       ————Operating profit                                       10,022                (13)                70                    –           10,079

Adjusted earnings before tax,depreciation, amortisationand exceptional items                          10,875               364                   –                    –           11,239

Depreciation                                                  (533)             (377)                  –                    –              (910)Amortisation                                                    (80)                  –                  70                    –                (10)Exceptional items                                          (240)                  –                    –                    –              (240)

Operating profit                                       10,022                (13)                70                    –           10,079                                                               ————       ————       ————       ————       ————Finance income                                                28                    –                    –                    –                  28

Finance costs                                                (432)               (73)                  –                    –              (505)                                                               ————       ————       ————       ————       ————Profit before taxation                                9,618                (86)                70                    –             9,602Income tax                                                  (1,733)                  –                    –                    –           (1,733)                                                               ————       ————       ————       ————       ————Profit for the year                                       7,885                (86)                70                    –             7,869                                                               ————       ————       ————       ————       ————

89

STATEMENT OF COMPREHENSIVE INCOME RECONCILIATIONS As previously reported Under IFRS Year Year Ended Ended 31 March 31 March 2020 IFRS 16 IFRS 3 Reclasses 2020                                                                    £’000             £’000             £’000             £’000             £’000

Revenue                                                    92,329                   –                    –                    –           92,329Cost of sales                                            (62,831)                  –                    –           (2,678)        (65,509)                                                               ————       ————       ————       ————       ————Gross profit                                              29,498                   –                    –           (2,678)         26,820Administration expenses                          (15,638)                60                  73             2,678         (12,827)                                                               ————       ————       ————       ————       ————Operating profit                                       13,860                 60                  73                    –           13,993

Adjusted earnings before tax,depreciation, amortisationand exceptional items                          15,672               579                (42)                  –           16,209

Depreciation                                               (1,029)             (519)                  –                    –           (1,548)Amortisation                                                  (140)                  –                115                   –                (25)Exceptional items                                          (643)                  –                    –                    –              (643)

Operating profit                                       13,860                 60                  73                    –           13,993Finance income                                                  3                    –                    –                    –                    3Finance costs                                                (692)               (91)                  –                    –              (783)                                                               ————       ————       ————       ————       ————Profit before taxation                              13,171                (31)                73                    –           13,213Income tax                                                  (2,318)                  –                    –                    –           (2,318)                                                               ————       ————       ————       ————       ————Profit for the year                                     10,853                (31)                73                    –           10,895                                                               ————       ————       ————       ————       ————

90

STATEMENT OF FINANCIAL POSITION RECONCILIATIONS As previously Under IFRS reported as at 1 July 1 July 2018 IFRS 16 IFRS 3 Reclasses 2018                                                                    £’000             £’000             £’000             £’000             £’000

AssetsGoodwill and other intangibles                       308                   –                  35                    –                343Property, plant and equipment                    2,651                   –                    –                    –             2,651Right of use assets                                             –                923                   –                    –                923Investments                                                      60                    –                    –                    –                  60Deferred tax                                                        –                    –                    –                    –                    –                                                               ————       ————       ————       ————       ————Total non-current assets                           3,019               923                 35                    –             3,977                                                               ————       ————       ————       ————       ————Current assetsInventories                                                 10,866                   –                    –                    –           10,866Trade and other receivables                      11,771                   –                    –                    –           11,771Derivative financial instruments                          –                    –                    –                    –                    –Corporation tax recoverable                               –                    –                    –                    –                    –Cash and cash equivalents                         1,342                   –                    –                    –             1,342                                                               ————       ————       ————       ————       ————Total current assets                                 23,979                   –                    –                    –           23,979                                                               ————       ————       ————       ————       ————Total assets                                              26,998               923                 35                    –           27,956                                                               ————       ————       ————       ————       ————LiabilitiesCurrent liabilitiesBorrowings                                                   8,157               170                   –                    –             8,327Trade and other payables                           6,582                   –                    –           (1,673)           4,909Current tax                                                          –                    –                    –             1,673             1,673                                                               ————       ————       ————       ————       ————Total current liabilities                            14,739               170                   –                    –           14,909                                                               ————       ————       ————       ————       ————Net current assets                                     9,240              (170)                  –                    –             9,070                                                               ————       ————       ————       ————       ————Borrowings                                                          –                730                   –                    –                730Deferred tax liability                                          42                    –                    –                    –                  42                                                               ————       ————       ————       ————       ————Total non-current liabilities                            42                730                   –                    –                772                                                               ————       ————       ————       ————       ————Total liabilities                                          14,781               900                   –                    –           15,681                                                               ————       ————       ————       ————       ————Net assets                                                 12,217 23 35 – 12,275                                                               ————       ————       ————       ————       ————EquityShare capital                                              11,001                   –                    –                    –           11,001Merger reserve                                         (22,000)                  –                    –                    –         (22,000)Retained earnings                                     23,216                 23                  35                    –           23,274                                                               ————       ————       ————       ————       ————Total equity 12,217 23 35 – 12,275                                                               ————       ————       ————       ————       ————

91

STATEMENT OF FINANCIAL POSITION RECONCILIATIONS As previously Under IFRS reported as at 31 March 31 March 2019 IFRS 16 IFRS 3 Reclasses 2019                                                                    £’000             £’000             £’000             £’000             £’000

AssetsGoodwill and other intangibles                       663                   –                105                   –                768Property, plant and equipment                    2,808                   –                    –                    –             2,808Right of use assets                                             –             2,014                   –                    –             2,014Investments                                                      60                    –                    –                    –                  60Deferred tax                                                        –                    –                    –                  31                  31                                                               ————       ————       ————       ————       ————Total non-current assets                           3,531            2,014               105                 31             5,681                                                               ————       ————       ————       ————       ————Current assetsInventories                                                 15,033                   –                    –                    –           15,033Trade and other receivables                      14,072                   –                    –                (31)         14,041Derivative financial instruments                          –                    –                    –                    –                    –Corporation tax recoverable                               –                    –                    –                    –                    –Cash and cash equivalents                         1,694                   –                    –                    –             1,694                                                               ————       ————       ————       ————       ————Total current assets                                 30,799                   –                    –                (31)         30,768                                                               ————       ————       ————       ————       ————Total assets                                              34,330            2,014               105                   –           36,449                                                               ————       ————       ————       ————       ————LiabilitiesCurrent liabilitiesBorrowings                                                   4,311               488                   –                    –             4,799Trade and other payables                           9,464                   –                    –           (1,953)           7,511Current tax                                                          –                    –                    –             1,953             1,953                                                               ————       ————       ————       ————       ————Total current liabilities                            13,775               488                   –                    –           14,263                                                               ————       ————       ————       ————       ————Net current assets                                   17,024              (488)                  –                (31)         16,505                                                               ————       ————       ————       ————       ————Borrowings                                                 16,419            1,589                   –                    –           18,008Deferred tax liability                                            –                    –                    –                    –                    –                                                               ————       ————       ————       ————       ————Total non-current liabilities                     16,419            1,589                   –                    –           18,008                                                               ————       ————       ————       ————       ————Total liabilities                                          30,194            2,077                   –                    –           32,271                                                               ————       ————       ————       ————       ————Net assets                                                   4,136                (63)              105                   –             4,178                                                               ————       ————       ————       ————       ————EquityShare capital                                              11,001                   –                    –                    –           11,001Merger reserve                                         (22,000)                  –                    –                    –         (22,000)Retained earnings                                     15,135                (63)              105                   –           15,177                                                               ————       ————       ————       ————       ————Total equity                                                 4,136 (63) 105 –             4,178                                                               ————       ————       ————       ————       ————

92

STATEMENT OF FINANCIAL POSITION RECONCILIATIONS As previously Under IFRS reported as at 31 March 31 March 2020 IFRS 16 IFRS 3 Reclasses 2020                                                                    £’000             £’000             £’000             £’000             £’000

AssetsGoodwill and other intangibles                    1,600                   –                178                   –             1,778Property, plant and equipment                    3,458                   –                    –                    –             3,458Right of use assets                                             –             1,495                   –                    –             1,495Investments                                                        7                    –                    –                    –                    7Deferred tax                                                        –                    –                    –                    –                    –                                                               ————       ————       ————       ————       ————Total non-current assets                           5,065            1,495               178                   –             6,738                                                               ————       ————       ————       ————       ————Current assetsInventories                                                 14,458                   –                    –                    –           14,458Trade and other receivables                      16,957                   –                    –              (218)         16,739Derivative financial instruments                          –                    –                    –                209                209Corporation tax recoverable                               –                    –                    –                    9                    9Cash and cash equivalents                         6,718                   –                    –                    –             6,718                                                               ————       ————       ————       ————       ————Total current assets                                 38,133                   –                    –                    –           38,133                                                               ————       ————       ————       ————       ————Total assets                                              43,198            1,495               178                   –           44,871                                                               ————       ————       ————       ————       ————LiabilitiesCurrent liabilitiesBorrowings                                                   6,688               493                   –                    –             7,181Trade and other payables                         16,022                   –                    –           (2,340)         13,682Current tax                                                          –                    –                    –             2,340             2,340                                                               ————       ————       ————       ————       ————Total current liabilities                            22,710               493                   –                    –           23,203                                                               ————       ————       ————       ————       ————Net current assets                                   15,423              (493)                  –                    –           14,930                                                               ————       ————       ————       ————       ————Borrowings                                                 16,317            1,096                   –                    –           17,413Deferred tax liability                                        191                   –                    –                    –                191                                                               ————       ————       ————       ————       ————Total non-current liabilities                     16,508            1,096                   –                    –           17,604                                                               ————       ————       ————       ————       ————Total liabilities                                          39,218            1,589                   –                    –           40,807                                                               ————       ————       ————       ————       ————Net assets 3,980 (94) 178 – 4,064                                                               ————       ————       ————       ————       ————EquityShare capital                                              11,001                   –                    –                    –           11,001Merger reserve                                         (22,000)                  –                    –                    –         (22,000)Retained earnings                                     14,979                (94)              178                   –           15,063                                                               ————       ————       ————       ————       ————Total equity 3,980 (94) 178 – 4,064                                                               ————       ————       ————       ————       ————

93

PART V

HISTORICAL FINANCIAL INFORMATION RELATING TO SUPREME IMPORTS

SECTION A: ACCOUNTANT’S REPORT ON THE HISTORICAL FINANCIAL INFORMATIONRELATING TO SUPREME IMPORTS

                                                                                                                        BDO LLP                                                                                                           3 Hardman Street

ManchesterM3 3AT

The DirectorsSupreme plc4 Beacon RoadAshburton ParkTrafford ParkManchesterM17 1AF

Grant Thornton UK LLP30 Finsbury SquareLondonEC2A 1AG                                                                                                                       27 January 2021

Ladies and Gentlemen

Supreme plc (the “Company”)

Supreme Imports Limited ( “Supreme Imports”)

Introduction

We report on the financial information set out in Section B of Part V. This financial information has beenprepared  for  inclusion  in  the  admission  document  dated 27  January 2021  of  the  Company  (the“Admission  Document”)  on  the  basis  of  the  accounting  policies  set  out  in  note  2  to  the  financialinformation. This report is required by paragraph (a) of Schedule Two of the AIM Rules for Companiesand is given for the purpose of complying with that paragraph and for no other purpose.

Responsibilities

The directors of the Company are responsible for preparing the financial information in accordance withInternational Financial Reporting Standards as adopted by the European Union.

It is our responsibility to form an opinion on the financial information and to report our opinion to you.

Save  for  any  responsibility  arising  under  paragraph  (a)  of  Schedule  Two  of  the  AIM  Rules  forCompanies to any person as and to the extent there provided, to the fullest extent permitted by the lawwe do not assume any responsibility and will not accept any liability to any other person for any losssuffered by any such other person as a result of, arising out of, or in connection with this report or ourstatement, required by and given solely for the purposes of complying with Schedule Two of the AIMRules for Companies consenting to its inclusion in the Admission Document.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts  and  disclosures  in  the  financial  information.  It  also  included  an  assessment  of  significantestimates and judgements made by those responsible for the preparation of the financial  informationand whether the accounting policies are appropriate to the entity’s circumstances, consistently appliedand adequately disclosed.

94

We planned and performed our work so as  to obtain all  the  information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial information is free from material misstatement whether caused by fraud or other irregularityor error.

Our  work  has  not  been  carried  out  in  accordance  with  auditing  or  other  standards  and  practicesgenerally accepted in the United States of America or other jurisdictions outside the United Kingdomand  accordingly  should  not  be  relied  upon  as  if  it  had  been  carried  out  in  accordance  with  thosestandards and practices.

Opinion

In our opinion, the financial information gives, for the purposes of the Admission Document, a true andfair view of the state of affairs of Supreme Imports as at 31 March 2018 and 2019 and of its profits, cashflows and changes in equity for the years then ended in accordance with the basis of preparation setout in note 1 to the financial information.

Declaration

For  the  purposes  of  Paragraph  (a)  of  Schedule  Two  of  the  AIM  Rules  for  Companies,  we  areresponsible  for  this  report  as  part  of  the Admission  Document  and  declare  that  we  have  taken  allreasonable care to ensure that the information contained in this report is, to the best of our knowledge,in  accordance with  the  facts  and  contains no omission  likely  to  affect  its  import. This  declaration  isincluded in the Admission Document in compliance with Schedule Two of the AIM Rules for Companies.

Yours faithfully

BDO LLPChartered Accountants

BDO LLP  is  a  limited  liability  partnership  registered  in England  and Wales  (with  registered  numberOC305127)

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SECTION B: HISTORICAL FINANCIAL INFORMATION RELATING TO SUPREME IMPORTS

Statement of Comprehensive Income Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                        Note                 £’000                 £’000

Revenue                                                                                                5               72,854               80,150Cost of sales                                                                                         6             (58,080)            (57,463)                                                                                                                           ————           ————Gross profit 14,774 22,687Administration expenses                                                                       6               (8,922)              (9,403)                                                                                                                           ————           ————Operating profit 5,852 13,284

Adjusted EBITDA1 7,699 14,835Depreciation                                                                                14 & 22                  (567)              (1,169)Amortisation                                                                                        13                      (7)                   (12)Exceptional items                                                                                  7                  (953)                 (370)Net loss from transactions in non-hedging foreign

exchange derivative contracts                                                           7                  (320)                      –

Operating profit 5,852 13,284Finance income                                                                                     9                        –                      28Finance costs                                                                                      10                  (385)                 (599)                                                                                                                           ————           ————Profit before taxation 5,467 12,713Income tax                                                                                           11               (1,095)              (2,317)                                                                                                                           ————           ————Profit for the year 4,372 10,396                                                                                                                           ————           ————Earnings per share – basic and diluted                                              12                    437                 1,040                                                                                                                           ————           ————

Note 1: Adjusted EBITDA, which is defined as profit before finance costs, tax, depreciation, amortisation, exceptional items, andprofit/(loss) from transactions in non-hedging foreign exchange derivative contracts is a non-GAAP metric used by managementand is not an IFRS disclosure.

All results derive from continuing operations.

96

Statement of Financial Position As at As at 31 March 31 March 2018 2019                                                                                                        Note                 £’000                 £’000

AssetsGoodwill and other intangibles                                                            13                    345                    768Property, plant and equipment                                                            14                 2,704                 2,808Right of use assets                                                                             22                    993                 2,014Investments                                                                                         15                      60                      60Deferred tax                                                                                        16                        –                      31                                                                                                                           ————           ————Total non-current assets 4,102 5,681                                                                                                                           ————           ————Current assetsInventories                                                                                           17               11,786               15,033Trade and other receivables                                                               18               12,476               14,041Income tax recoverable                                                                                                53                        –Cash and cash equivalents                                                                 19                 9,123                 1,694                                                                                                                           ————           ————Total current assets 33,438 30,768                                                                                                                           ————           ————Total assets 37,540 36,449                                                                                                                           ————           ————LiabilitiesCurrent liabilitiesBorrowings                                                                                          21               16,952                 4,799Trade and other payables                                                                   20                 7,885                 7,511Derivative financial instruments                                                       23.9                    778                        –Income tax payable                                                                                                 1,085                 1,953                                                                                                                           ————           ————Total current liabilities 26,700 14,263                                                                                                                           ————           ————Net current assets 6,738 16,505                                                                                                                           ————           ————Borrowings                                                                                          21                    724               18,008Deferred tax liability                                                                             16                      46                        –                                                                                                                           ————           ————Total non-current liabilities 770 18,008                                                                                                                           ————           ————Total liabilities 27,470 32,271                                                                                                                           ————           ————Net assets 10,070 4,178 ————           ————EquityShare capital                                                                                       24                        –                        –Retained earnings                                                                                                 10,070                 4,178                                                                                                                           ————           ————Total equity 10,070 4,178 ————           ————

97

Statement of Changes in Equity Share Retained Total Capital earnings equity                                                                                                       £’000                 £’000                 £’000

As at 1 April 2017 – 13,409 13,409 ———— ———— ————Profit for the year                                                                                  –                 4,372                 4,372 ———— ———— ————Total comprehensive income for the year                                             –                 4,372                 4,372 ———— ———— ————Transactions with shareholders:Dividends                                                                                              –                (7,711)              (7,711) ———— ———— ————As at 31 March 2018 – 10,070 10,070 ———— ———— ————Profit for the year                                                                                  –               10,396               10,396 ———— ———— ————Total comprehensive income for the year                                             –               10,396               10,396 ———— ———— ————Transactions with shareholders:Dividends                                                                                               –             (16,288)            (16,288) ———— ———— ————As at 31 March 2019 – 4,178 4,178 ————           ————           ————

98

Statement of Cash Flows Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                        Note                 £’000                 £’000

Net cash flow from operating activitiesProfit for the year                                                                                                     4,372               10,396Adjustments for:Amortisation of intangible assets                                                        13                        7                      12Depreciation of tangible assets                                                  14 & 22                    567                 1,169Finance income                                                                                     9                        –                    (28)Finance costs                                                                                      10                    385                    599Income tax expense                                                                            11                 1,095                 2,317Working capital adjustmentsIncrease in inventories                                                                                           (3,369)              (3,247)Decrease/(increase) in trade and other receivables                                                  781               (1,242)Increase/(Decrease) in trade and other payables                                                      824               (1,473)Taxation paid                                                                                                          (1,376)              (1,473)                                                                                                                           ————           ————Net cash from operations 3,286 7,030 ———— ————Cash flows used in investing activitiesPurchase of intangible fixed assets                                                    13                        –                  (435)Purchase of property, plant and equipment                                        14               (1,353)              (1,007)Proceeds from sale of property, plant and equipment                        14                        –                    192Directors loan account movement                                                                                  –                  (321)Interest received                                                                                                             –                      28Net cash on acquisition of subsidiary undertaking                                                         7                        –                                                                                                                           ————           ————Net cash used in investing activities (1,346) (1,543)                                                                                                                           ————           ————Cash flows used in financing activitiesDrawdown of borrowings                                                                     21                 8,062               16,419Repayment of borrowings                                                                   21               (3,407)              (3,620)Dividends paid                                                                                                        (7,711)            (15,967)Finance costs paid                                                                                                    (372)                 (515)Lease payments                                                                                  22                  (200)                 (452)                                                                                                                           ————           ————Net cash used in financing activities (3,628) (4,135)                                                                                                                           ————           ————Net (decrease)/increase in cash and cash equivalents (1,688) 1,352Cash and cash equivalents brought forward                                                      1,879                    191                                                                                                                           ————           ————Cash and cash equivalents carried forward 191 1,543 ————           ————Cash and cash equivalents                                                                 19                 9,123                 1,694Bank overdraft                                                                                     21               (8,932)                 (151)                                                                                                                           ————           ————                                                                                                                                   191 1,543 ———— ————

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Notes to the Historical Financial Information

1. Basis of preparation

Supreme Imports Ltd (“Supreme Imports”)  is domiciled  in  the UK, with company registration number05292196.  The  principal  activity  is  the  wholesale  distribution  of  batteries,  lighting,  vaping  and  theassociated sundry products, sports nutrition and wellness and branded household consumer goods.The registered office is 4 Beacon Road, Ashburton Park, Trafford Park, Manchester, M17 1AF.

This historical  financial  information (“Historical Financial  Information”) has been prepared on a goingconcern  basis  under  the  historical  cost  convention, modified  for  the  revaluation  of  certain  financialinstruments; in accordance with International Financial Reporting Standards (IFRSs) as adopted by theEU, the International Financial Reporting Interpretations Committee (IFRIC)  interpretations issued bythe  International Accounting Standards Boards  (“IASB”)  that  are  effective  or  issued  and  have  beenadopted as at the time of preparing this Historical Financial Information, except as described below.

The  deemed  transition  date  to  IFRS,  for  the  purposes  of  this  Historical  Financial  Information  onSupreme  Imports  is  1 April  2017,  which  is  the  beginning  of  the  first  year  presented.  Details  of  thetransition are set out in Note 30. The principles and requirements for first time adoption of IFRS are setout  in  IFRS  1.  IFRS  1  allows  certain  exceptions  and  exemptions  in  the  application  of  particularstandards to prior years in order to assist companies with the transition process. Supreme Imports hasnot applied any of the optional exemptions and has applied the exception with regard to restatement ofpast business combinations under IFRS 3. Contrary to the requirements of IFRS 1, a balance sheet asat the date of transition of 1 April 2017 has not been presented and this is therefore a departure fromthe requirements of IFRS. In all other respects IFRS has been applied.

This Historical Financial Information presents the financial track record of Supreme Imports for the twoyears ended 31 March 2019 and is prepared for the purposes of admission to AIM, a market operatedby the London Stock Exchange. This Historical Financial Information has been prepared in accordancewith the requirements of the AIM Rules for Companies and in accordance with this basis of preparationsummarised below.

The preparation of Historical Financial Information requires the Directors to exercise their judgement inthe  process  of  applying  accounting  policies.  The  areas  involving  a  higher  degree  of  judgement  orcomplexity,  or  areas  where  assumptions  and  estimates  are  significant  to  the  Historical  FinancialInformation are disclosed in Note 4.

The financial information for the year ended 31 March 2019 and the year ended 31 March 2018 doesnot constitute Supreme Imports’ statutory accounts for those years.

Statutory accounts for the years ended 31 March 2019 and 31 March 2018 have been delivered to theRegistrar of Companies.

The auditors’ reports on the accounts for 31 March 2019 and 31 March 2018 were unqualified, did notdraw attention  to any matters by way of emphasis, and did not contain a statement under 498(2) or498(3) of the Companies Act 2006.

The Historical Financial Information is presented in sterling and, unless otherwise stated, amounts areexpressed in pounds, to the nearest thousand.

The Board and the Financial Director are, together, considered the chief operating decision maker.

2. Summary of significant accounting policies

The principal accounting policies adopted are set out below.

2.1 Group accounts

The Historical Financial Information contains information about Supreme Imports as an individualcompany  and  does  not  contain  consolidated  financial  information  as  the  parent  of  a  group.Supreme Imports has  taken  the exemption available  from preparing  the consolidated  financialstatements on the basis that the subsidiary undertakings are not material.

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2.2 Going concern

Supreme Imports Ltd is funded by external banking facilities provided by HSBC until March 2024,as  well  as  through  surplus  cash  held  at  bank.  Taking  account  of  these  facilities  and  havingconsidered  future  strong  trading  and  cash  flow  forecasts,  the  Directors  have  a  reasonableexpectation that Supreme Imports has adequate resources to continue in operational existencefor the foreseeable future. Accordingly, the Directors continue to adopt the going concern basisin preparing the Historical Financial Information.

2.3 Currencies

Functional and presentational currency

Items  included  in  the Historical Financial  Information are measured using  the currency of  theprimary economic environment  in which Supreme  Imports operates  (“the  functional currency”)which is UK sterling (£). The Historical Financial Information is presented in UK sterling.

Transactions and balances

Foreign  currency  transactions  are  translated  into  the  functional  currency  using  a  standardexchange rate for a period if the rates do not fluctuate significantly. Foreign exchange gains andlosses  resulting  from  the settlement of such  transactions and  from  the  translation at year-endexchange  rates  of  monetary  assets  and  liabilities  denominated  in  foreign  currencies  arerecognised in the statement of comprehensive income. Non-monetary items that are measuredin terms of historical cost in a foreign currency are not retranslated.

2.4 Revenue recognition

Revenue  solely  relates  to  the  sale  of  goods  and  arises  from  the  wholesale  distribution  ofbatteries, lighting, vaping and the associated sundry products.

To determine whether to recognise revenue, Supreme Imports follows the 5-step process as setout within IFRS 15:

1.       Identifying the contract with a customer.

2.       Identifying the performance obligations.

3.       Determining the transaction price.

4.       Allocating the transaction price to the performance obligations.

5.       Recognising revenue when/as performance obligation(s) are satisfied.

Revenue  is measured  at  transaction  price,  stated  net  of  VAT,  and  other  sales  related  taxes.Rebates  to  customers  take  the  form  of  volume  discounts,  which  are  a  type  of  variableconsideration, and the transaction price is constrained to reflect the rebate element.

Revenue is recognised at a point in time as Supreme Imports satisfies performance obligationsby transferring the promised goods to its customers as described below. Variable consideration,in the form of rebates, is also recognised at the point of transfer, however the estimate of variableconsideration is constrained at this point and released once it is highly probable there will not bea significant reversal.

Contracts with customers take the form of customer orders. There is one distinct performanceobligation, being the distribution of products to the customer,  for which the transaction price  isclearly  identified.  Revenue  is  recognised  at  a  point  in  time  when  Supreme  Imports  satisfiesperformance obligations by transferring the promised goods to its customers,  i.e. when controlhas passed from Supreme Imports to the customer, which tends to be on receipt by the customer.In  respect  of  certain  direct  shipments  control  passes  when  an  invoice  is  raised,  paymentreceived, and title formally transferred to the customer.

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2.5 Goodwill

The carrying value of goodwill has arisen following the acquisition of subsidiary entities, wherethe  trade  and  assets  have  subsequently  been  hived  up  (at  fair  value)  into  this  companyimmediately post acquisition, and the related investment balance transferred to goodwill. Suchgoodwill is subject to an impairment review, both annually and when there is an indication thatthe carrying value may be  impaired. Any  impairment  is  recognised  immediately  in  the  incomestatement and is not reversed.

2.6 Property, plant and equipment

Property,  plant  and  equipment  are  stated  at  cost  less  accumulated  depreciation  and  anyimpairment  losses.  Cost  includes  the  original  purchase  price  of  the  asset  and  the  costsattributable  to  bringing  the  asset  to  its working  condition  for  its  intended use. Depreciation  ischarged so as to write off the costs of assets over their estimated useful lives, on a straight-linebasis starting from the month they are first used, as follows:

Plant and machinery – 25%Fixtures and fittings – 25%Motor vehicle – 25%Fashion hire assets – 25%

The gain or loss arising on the disposal of an asset is determined as the difference between thesales  proceeds  and  the  carrying  amount  of  the  asset  and  is  recognised  in  the  Statement  ofComprehensive Income.

At each reporting date, Supreme Imports reviews the carrying amounts of its property, plant andequipment assets to determine whether there is any indication that those assets have sufferedan  impairment  loss.  If  any  such  indication  exists,  the  recoverable  amount  of  the  asset  isestimated in order to determine the extent of the impairment loss (if any).

Fashion Hire assets are presented within property, plant and equipment. Revenue is generatedfrom these assets through hire to third party customers.

2.7 Inventories

Inventories are valued using a first in, first out method and are stated at the lower of cost and netrealisable value. Cost includes expenditure incurred in the normal course of business in bringingthe products to their present location and condition.

At  the  end  of  each  reporting  period  inventories  are  assessed  for  impairment.  If  an  item  ofinventory is impaired, the identified inventory is reduced to its selling price less costs to completeand sell and an impairment charge is recognised in the income statement. Where a reversal ofthe impairment  is recognised the impairment charge is reversed, up to the original  impairmentloss, and is recognised as a credit in the income statement.

2.8 Income tax

The tax expense or credit represents the sum of the tax currently payable or recoverable and themovement in deferred tax assets and liabilities.

(a) Current income tax

Current  tax  is  based  on  taxable  income  for  the  year  and  any  adjustment  to  tax  fromprevious years. Taxable income differs from net income in the statement of comprehensiveincome because it excludes items of income or expense that are taxable or deductible inother years or that are never taxable or deductible. The calculation uses the latest tax ratesfor the year that have been enacted or substantively enacted by the dates of the Statementof Financial Position.

(b) Deferred tax

Deferred tax is calculated at the latest tax rates that have been substantively enacted bythe reporting date that are expected to apply when settled. It is charged or credited in the

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Statement of Comprehensive Income, except when it relates to items credited or chargeddirectly to equity, in which case it is also dealt with in equity.

Deferred tax is the tax expected to be payable or recoverable on differences between thecarrying amounts of assets and  liabilities  in  the Historical Financial  Information and  thecorresponding tax bases used in the computation of taxable income, and is accounted forusing the liability method. It is not discounted.

Deferred tax liabilities are generally recognised for all taxable temporary differences anddeferred tax assets are recognised to the extent that it is probable that taxable income willbe available against which the asset can be utilised. Such assets are reduced to the extentthat it is no longer probable that the asset can be utilised.

Deferred  tax  assets  and  liabilities  are  offset  when  there  is  a  right  to  offset  current  taxassets and liabilities and when the deferred tax assets and liabilities relate to taxes leviedby the same taxation authority on either the same taxable entity or different taxable entitieswhere there is an intention to settle the balances on a net basis.

2.9 Leases

Supreme Imports has applied IFRS 16 throughout the period covered by the HFI. At inception ofa contract, Supreme Imports assesses whether a contract is, or contains, a lease. A contract is,or contains, a lease if the contract conveys the right to control the use of an identified asset fora period of time in exchange for consideration.

Supreme  Imports  recognises  a  right-of-use  asset  and  a  lease  liability  at  the  leasecommencement date. The right-of-use asset  is  initially measured at cost, which comprises theinitial  amount  of  the  lease  liability  adjusted  for  any  lease  payments  made  at  or  beforethe commencement date, plus any initial direct costs incurred and an estimate of costs to restorethe underlying asset, less any lease incentives received.

The  right-of-use  asset  is  subsequently  depreciated  using  the  straight-line  method  from  thecommencement date to the earlier of the end of the useful life of the right-of-use asset or the endof the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses,if any, and adjusted for certain remeasurements of the lease liabilities.

The lease liability is initially measured at the present value of lease payments that were not paidat the commencement date, discounted using Supreme Imports’ incremental borrowing rate.

The lease liability is measured at amortised cost using the effective interest method. If there is aremeasurement of the lease liability, a corresponding adjustment is made to the carrying amountof the right-of-use asset, or is recorded directly in profit or loss if the carrying amount of the rightof use asset is zero.

Short term leases and low value assets

Supreme Imports has elected not to recognise right-of-use assets and lease liabilities for short-term  lease of machinery  that  have a  lease  term of  12 months or  less or  leases of  low  valueassets. These lease payments are expensed on a straight-line basis over the lease term.

2.10 Payroll expense and related contributions

Supreme  Imports  provides  a  range  of  benefits  to  employees,  including  annual  bonusarrangements, paid holiday arrangements and defined contribution pension plans.

Short  term  benefits,  including  holiday  pay  and  other  similar  non-monetary  benefits,  arerecognised as an expense in the period in which the service is received.

2.11 Pension costs

Supreme Imports operates a defined contribution pension scheme for employees. The assets ofthe  scheme  are  held  separately  from  those  of  Supreme  Imports.  The  annual  contributionspayable are charged to the statement of comprehensive income.

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2.12 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided tothe  chief  operating  decision-maker.  The  chief  operating  decision-maker  is  responsible  forallocating resources and assessing performance of operating segments.

The Directors consider that there are five identifiable business segments, being the distributionof  batteries,  lighting,  vaping,  sports  nutrition  &  wellness,  and  branded  household  consumergoods.

2.13 Dividends

Dividends are recognised as a liability and deducted from equity at the time they are approved.Otherwise dividends are disclosed if  they have been proposed or declared before the relevantfinancial statements are approved.

2.14 EBITDA and Adjusted EBITDA

Earnings  before  Interest,  Taxation,  Depreciation  and  Amortisation  (“EBITDA”)  and  AdjustedEBITDA are non-GAAP measures used by management to assess the operating performance ofSupreme  Imports.  EBITDA  is  defined  as  profit  before  finance  costs,  tax,  depreciation  andamortisation. Exceptional items are excluded from EBITDA to calculate adjusted EBITDA.

The  Directors  primarily  use  the  Adjusted  EBITDA  measure  when  making  decisions  aboutSupreme  Imports’ activities as  this provides useful  information  for shareholders on underlyingtrends  and  performance. As  these  are  non-GAAP measures,  EBITDA  and Adjusted  EBITDAmeasures  used  by  other  entities may  not  be  calculated  in  the  same way  and  hence  are  notdirectly comparable.

2.15 Exceptional costs and non-recurring items

Supreme  Imports’  income  statement  separately  identifies  exceptional  items.  Such  items  arethose  that  in  the Directors’  judgement  are  one-off  in  nature  or  non-operating  and need  to  bedisclosed separately by virtue of their size or incidence and may include, but are not limited to,professional  fees  and  other  costs  directly  related  to  refinancing,  acquisitions  and  capitaltransactions, material impairments of inventories and fashion hire assets. In determining whetheran  item  should  be  disclosed  as  an  exceptional  item,  the  Directors  consider  quantitative  andqualitative  factors such as  the  frequency, predictability of occurrence and significance. This  isconsistent with the way financial performance is measured by management and reported to theBoard.

2.16 Financial instruments

Financial  assets  and  financial  liabilities  are  recognised  in  Supreme  Imports’  Statement  ofFinancial Position when Supreme  Imports  becomes party  to  the  contractual  provisions  of  theinstrument. Financial assets are de-recognised when the contractual rights to the cash flows fromthe financial asset expire or when the contractual rights to those assets are transferred. Financialliabilities are de-recognised when the obligation specified in the contract is discharged, cancelledor expired.

Trade and other receivables

Trade  and  other  receivables  are  initially  measured  at  transaction  price  less  provisions  forexpected credit losses. The group applies the IFRS 9 simplified approach to measuring expectedcredit losses which uses a lifetime expected loss allowance. This lifetime expected credit lossesis used in cases where the credit risk on other receivables has increased significantly since initialrecognition. In cases where the credit risk has not increased significantly, the Group measuresthe loss allowance at an amount equal to the 12-month expected credit loss. This assessment isperformed on a collective basis considering forward-looking information.

IFRS 9’s impairment requirements use forward-looking information to recognise expected creditlosses – the ‘expected credit loss (ECL) model’.

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Recognition of  credit  losses  is  determined by  considering a broad  range of  information whenassessing  credit  risk  and  measuring  expected  credit  losses,  including  past  events,  currentconditions and reasonable and supportable forecasts that affect the expected collectability of thefuture cash flows of the instrument.

Measurement of the expected credit losses is determined by a probability-weighted estimate ofcredit losses over the expected life of the financial instrument.

Credit Insurance is applied to all accounts over £2,500 with exception of proforma accounts andaccounts agreed by the CEO.

Interest  income  is  recognised  by  applying  the  effective  interest  rate,  except  for  short-termreceivables when the recognition of interest would be immaterial.

Cash and cash equivalents

Cash  and  cash  equivalents  consist  of  cash  on  hand,  demand  deposits,  and  other  short-termhighly liquid investments that are readily convertible to a known amount of cash and are subjectto an insignificant risk of changes in value.

Trade and other payables

Trade  and  other  payables  are  initially  measured  at  their  fair  value  and  are  subsequentlymeasured at their amortised cost using the effective interest rate method; this method allocatesinterest expense over the relevant period by applying the “effective interest rate” to the carryingamount of the liability.

Invoice discounting facility

Supreme Imports has entered into an invoice discounting arrangement with the bank, where aproportion of the debts have been legally transferred but the benefits and risks are retained bySupreme Imports. Gross receivables are included within debtors and a corresponding liability inrespect of the proceeds received from the bank are shown within liabilities. The interest elementof  the  bank’s  charges  are  recognised  as  they  accrue  and  included  in  the  statement  ofcomprehensive income within other interest payable.

Borrowings

Interest-bearing  overdrafts  are  classified  as  other  liabilities.  They  are  initially  recorded  at  fairvalue, which represents the fair value of the consideration received, net of any direct transactioncosts associated with the relevant borrowings. Borrowings are subsequently stated at amortisedcost and finance charges are recognised in the Statement of Comprehensive Income over theterm of the instrument using an effective rate of interest. Finance charges, including premiumspayable on settlement or redemption, are accounted for on an accruals basis and are added tothe carrying amount of the instrument to the extent that they are not settled in the period in whichthey  arise.  Borrowings  are  classified  as  current  liabilities  unless  Supreme  Imports  has  anunconditional  right  to defer settlement of  the  liability  for at  least 12 months after  the  reportingdate.

Classification as debt or equity

Debt  and  equity  instruments  issued  by  Supreme  Imports  are  classified  as  either  financialliabilities or as equity in accordance with the substance of the contractual arrangements and thedefinitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entityafter deducting all of its liabilities. Equity instruments issued by Supreme Imports are recognisedat the proceeds received, net of direct issue costs.

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Derivatives

Derivatives are initially recognised at the fair value on the date the derivative contract is enteredinto and are subsequently re-measured at their fair value. Changes in the fair value of derivativesare recognised in the income statement within cost of sales, on the basis that is where the relatedexpense  is  recognised,  unless  they  are  included  in  a  hedging  arrangement.  Where  theinstruments have been traded to take advantage of currency movements and not directly linkedto  the  settlement  of  purchase  requirements  the  gain  or  loss  is  recognised  separately  in  thestatement of comprehensive income as other operating income/expense. Financial liabilities arederecognised  when  the  liability  is  extinguished,  that  is  when  the  contractual  obligation  isdischarged, cancelled or expires.

3. Financial risk management

3.1 Financial risk factors

Supreme Imports’ activities expose it to certain financial risks: market risk, credit risk and liquidityrisk. The overall risk management programme focuses on the unpredictability of financial marketsand seeks to minimise potential adverse effects on Supreme Imports’ financial performance. Riskmanagement  is carried out by  the Directors, who  identify and evaluate  financial  risks  in closeco-operation with key staff, for further details see Note 23.

(a) Market risk

Market  risk  is  the  risk  of  loss  that  may  arise  from  changes  in market  factors  such  ascompetitor pricing, interest rates, foreign exchange rates.

(b) Credit risk

Credit risk is the financial loss to Supreme Imports if a customer or counterparty to financialinstruments  fails  to  meet  its  contractual  obligation.  Credit  risk  arises  from  SupremeImports’ cash and cash equivalents and receivables balances. Credit Insurance is appliedto all accounts over £2,500 with exception of proforma accounts and accounts agreed bythe CEO and therefore credit risk is considered low.

(c) Liquidity risk

Liquidity  risk  is  the  risk  that  Supreme  Imports  will  not  be  able  to  meet  its  financialobligations  as  they  fall  due. This  risk  relates  to Supreme  Imports’  prudent  liquidity  riskmanagement  and  implies  maintaining  sufficient  cash.  The  Directors  monitor  rollingforecasts of Supreme Imports’ liquidity and cash and cash equivalents based on expectedcash flow.

3.2 Capital risk management

Supreme Imports is funded by equity and loans. The components of shareholders’ equity are:

(a)      The share capital account arising on the issue of shares.

(b)      The retained reserve or deficit reflecting comprehensive income to date.

(c)      The banking facilities comprising a supply chain and invoice discounting facility.

Supreme Imports’ objective when managing capital is to maintain adequate financial flexibility topreserve its ability to meet financial obligations, both current and long term. The capital structureof  Supreme  Imports  is  managed  and  adjusted  to  reflect  changes  in  economic  conditions.Supreme Imports funds its expenditures on commitments from existing cash and cash equivalentbalances,  primarily  received  from  issuances  of  shareholders’  equity.  There  are  no  externallyimposed capital requirements. Financing decisions are made based on forecasts of the expectedtiming  and  level  of  capital  and  operating  expenditure  required  to  meet  Supreme  Imports’commitments and development plans. Quantitative data on what Supreme Imports manages ascapital is included in the Statement of Changes in Equity and in Note 23 to the Historical FinancialInformation.

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3.3 Fair value estimation

The carrying value less impairment provision of trade receivables and payables are assumed toapproximate to their fair values because of the short-term nature of such assets and the effect ofdiscounting liabilities is negligible.

4. Critical accounting estimates and judgements

The preparation of this Historical Financial Information requires management to make judgements andestimates  that  affect  the  reported  amounts  of  assets  and  liabilities  at  each  Statement  of  FinancialPosition date and the reported amounts of revenue during the reporting periods. Actual results coulddiffer  from  these  estimates.  Information  about  such  judgements  and  estimations  are  contained  inindividual accounting policies. The key  judgements and sources of estimation uncertainty  that couldcause  an  adjustment  to  be  required  to  the  carrying  amount  of  asset  or  liabilities  within  the  nextaccounting period are outlined below:

Accounting estimates

4.1 Goodwill impairment

Supreme  Imports  tests  goodwill  for  impairment  every  year  in  accordance  with  the  relevantaccounting  policies.  The  recoverable  amounts  of  cash-generating  units  are  determined  bycalculating value in use. These calculations require the use of estimates.

Goodwill  relates  to  various  acquisitions  and  amounts  to  £613,000  at  31  March  2019.  Theestimates used  in  the  impairment calculation are set out  in Note 13. There are no reasonablypossible scenarios in which the goodwill would be impaired.

4.2 Useful economic lives of property, plant and equipment

Property, plant and equipment is depreciated over the useful lives of the assets. Useful lives arebased on the management’s estimates of the period that the assets will generate revenue, whichare  reviewed  annually  for  continued  appropriateness.  The  carrying  values  are  tested  forimpairment when  there  is an  indication  that  the value of  the assets might be  impaired. Whencarrying out impairment tests these would be based upon future cash flow forecasts and theseforecasts  would  be  based  upon  management  judgement.  Future  events  could  cause  theassumptions  to  change,  therefore  this  could  have  an  adverse  effect  on  the  future  results  ofSupreme Imports.

The  useful  economic  lives  applied  are  set  out  in  the  accounting  policies  (Note  2.6)  and  arereviewed annually.

Accounting judgements

4.3 Inventory obsolescence

Management  make  use  of  judgement  in  determining  whether  certain  inventory  items  areobsolete.  Should  these  judgements  be  incorrect  there  could  be  a  material  difference  in  therecoverable value of inventory.

4.4 Right of use assets – discount rate

Management make use of judgements in determining the discount rate to be applied to the IFRS16 ‘Leases’ right of use asset and liability. This judgement determines the carrying value of theassets and liabilities, and the resulting depreciation and interest charge that is incurred.

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5. Segmental analysis

The Chief Operating Decision Maker  (“CODM”)  has  been  identified  as  the  Board  of  Directors.  TheBoard  reviews  Supreme  Imports’  internal  reporting  in  order  to  assess  performance  and  allocateresources. No balance sheet analysis is available by segment or reviewed by the CODM. The Boardhas determined that the operating segments, based on these reports, are the sale of:

•         batteries;

•         lighting;

•         vaping;

•         sports nutrition & wellness; and

•         branded household consumer goods.

The Gross profit before foreign exchange shows the results using standard foreign exchange rates thatare used throughout the year. The foreign exchange adjustment shown before gross profit is to adjustback to the actual rates incurred.

Branded Year Sports household Ended nutrition & consumer 31 March Batteries Lighting Vaping wellness goods 2019                                                    £’000            £’000            £’000            £’000            £’000            £’000

Revenue                                    33,353          22,711         20,958           2,389              739         80,150Cost of sales                            (29,944)       (16,732)       (11,559)         (1,209)            (532)       (59,976)                                              ————      ————      ————      ————      ————      ————Gross profit beforeforeign exchange 3,409 5,979 9,399 1,180 207 20,174

Foreign exchange                                                                                                                             2,513                                                                                                                                                    ————Gross profit 22,687Administration expenses                                                                                                                  (9,403)                                                                                                                                                    ————Operating profit 13,284

Adjusted earnings beforetax, depreciation,amortisation andexceptional items 14,835

Depreciation                                                                                                                                     (1,169)Amortisation                                                                                                                                          (12)Exceptional items                                                                                                                                (370)Net loss from transactionsin non-hedging foreignexchange derivativecontracts                                                                                                                                               –

Operating profit 13,284Finance income                                                                                                                                      28Finance costs                                                                                                                                      (599)                                                                                                                                                    ————Profit before taxation 12,713Income tax                                                                                                                                       (2,317)                                                                                                                                                    ————Profit for the year 10,396 ————

108

Branded Year Sports household Ended nutrition & consumer 31 March Batteries Lighting Vaping wellness goods 2018                                                    £’000            £’000            £’000            £’000            £’000            £’000

Revenue                                    33,414         20,874         17,705                  –               861         72,854Cost of sales                            (29,647)       (16,336)       (10,700)                 –             (652)       (57,335)                                              ————      ————      ————      ————      ————      ————Gross profit beforeforeign exchange 3,767 4,538 7,005 – 209 15,519

Foreign exchange                                                                                                                               (745)                                                                                                                                                    ————Gross profit 14,774Administration expenses                                                                                                                  (8,922)                                                                                                                                                    ————Operating profit 5,852

Adjusted earnings beforetax, depreciation,amortisation andexceptional items 7,699

Depreciation                                                                                                                                        (567)Amortisation                                                                                                                                            (7)Exceptional items                                                                                                                                (953)Net loss from transactionsin non-hedging foreignexchange derivativecontracts                                                                                                                                          (320)

Operating profit 5,852Finance income                                                                                                                                        –Finance costs                                                                                                                                      (385)                                                                                                                                                    ————Profit before taxation 5,467Income tax                                                                                                                                       (1,095)                                                                                                                                                    ————Profit for the year 4,372 ————Information about major customers

Supreme  Imports has generated  revenue  from  individual  customers  that accounted  for greater  than10% of  total  revenue. The  total  revenue  from each  of  these  2  customers  (2018:  2  customers) was£16,888,000 and £11,501,000  (2018:  £13,437,000 and £10,026,000). These  revenues  related  to  allsegments.

Analysis of revenue by geographical destination Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

United Kingdom                                                                                                     63,772               68,803Rest of Europe                                                                                                         7,742               10,361Rest of the World                                                                                                     1,340                    986                                                                                                                           ————           ————                                                                                                                              72,854 80,150 ————           ————The above revenues are all generated from contracts with customers and are recognised at a point intime. All assets of Supreme Imports reside in the UK.

109

6. Expenses by nature Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

The profit is stated after charging expenses as follows:Inventories recognised as an expense                                                                  52,838               52,902Impairment of inventories (excluding exceptional costs)                                              91                        5Impairment of trade receivables                                                                                   42                      94Staff costs – Note 8                                                                                                 4,248                 4,833Foreign exchange loss                                                                                               408                        –Exceptional and non-recurring items – Note 7                                                        1,273                    370Establishment and general                                                                                         599                    452Depreciation of property, plant and equipment                                                           567                 1,169Amortisation of intangible assets                                                                                    7                      12Auditor’s remuneration                                                                                                 45                      47Other operating expenses                                                                                       6,884                 6,982                                                                                                                           ————           ————Total cost of sales and administrative expenses                                                   67,002               66,866                                                                                                                           ————           ————7. Exceptional costs and non-recurring items Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Exceptional cost of sales                                                                                           (480)                 (130)Exceptional administrative expenses                                                                        (473)                 (240)Net gains from settled transactions in non-hedging foreign exchange

derivative contracts                                                                                                 166                        –Net losses from unsettled transactions in non-hedging foreign exchange

derivative contracts                                                                                                (486)                      –                                                                                                                           ————           ————                                                                                                                               (1,273)                 (370)                                                                                                                           ————           ————Exceptional cost of sales –  included within cost of sales  is a non-recurring  item of £130,000  (2018:£480,000)  relating  to  a  write-down  of  inventories  following  a  recall  of  vaping  inventory  following  achange in the Tobacco and Related Products Regulations Amendment 2017 (May 2017).

Exceptional administrative expenses include a non-recurring item of £120,000 relating to professionalfees  in  connection  with  the  refinancing  of  the  prior  year  loan  facility  and  a  non-recurring  item  of£120,000  relating  to  a  loss  on  sale  of  fashion  hire  watch  assets.  Included  within  exceptionaladministrative expenses in 2018 is a non-recurring item of £473,000 of professional fees in relation toa potential IPO that did not proceed.

Non-hedging foreign exchange derivative contracts

Supreme Imports mitigates the exchange risk of certain foreign currency trade debtors and creditors byentering into forward currency contracts. Supreme Imports’ forex policy is to purchase forward contractsto mitigate changes in spot rates, based on the timing of purchases to be made. Management forecastthe timing of purchases and make assumptions relating to the exchange rate at which Supreme Importscosts its products and take out forward contracts to mitigate fluctuations to an acceptable level.

In 2018 Supreme Imports utilised the forward contracts to generate gains through speculative tradingwith  these gains and  losses being presented within administrative expenses within  the Statement ofComprehensive Income. All other exchange items are presented within cost of sales.

Amounts  noted  as  settled  are  where  the  gains  are  realised  and  the  instruments  closed;  whereasamounts noted as unsettled relate to open contracts at the year end.

110

8. Staff and remuneration Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                    No.                    No.

Average number of employees (including Directors):Management and administration                                                                                  31                      25Warehouse                                                                                                                    51                      57Sales                                                                                                                             19                      17Development                                                                                                                 33                      47                                                                                                                           ————           ————                                                                                                                                   134                    146                                                                                                                           ————           ———— Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Aggregate remuneration of staff (including Directors):Wages and salaries                                                                                                 3,872                 4,215Social security costs                                                                                                   264                    425Other pension costs                                                                                                    112                    193                                                                                                                           ————           ————                                                                                                                                4,248                 4,833                                                                                                                           ————           ————9. Finance income Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Other interest receivable                                                                                                –                      28                                                                                                                           ————           ————                                                                                                                                       –                      28                                                                                                                           ————           ————10. Finance expense Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Bank interest payable                                                                                                   75                      82Other interest payable                                                                                                297                    433Interest on right-of-use assets                                                                                      13                      84                                                                                                                           ————           ————                                                                                                                                   385                    599                                                                                                                           ————           ————Other  interest  payable  represents  interest  payable  in  respect  of  the  invoice  discounting  and  supplychain facilities.

111

11. Taxation Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Current taxCurrent year – UK corporation tax                                                                           1,084                 2,571Adjustments in respect of prior periods                                                                       (43)                 (180)                                                                                                                           ————           ————Total current tax                                                                                                     1,041                 2,391 ———— ————Deferred taxOrigination and reversal of timing differences                                                              73                    (32)Adjustment for prior periods                                                                                        (19)                   (42)                                                                                                                           ————           ————Total deferred tax                                                                                                        54                    (74) ———— ————Total tax expense                                                                                                     1,095                 2,317 ———— ————Factors affecting the charge Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Profit before taxation                                                                                               5,467               12,713                                                                                                                           ————           ————Tax at the UK corporation tax rate of 19%                                                              1,039                 2,415Adjustment to tax charge in respect of prior periods                                                  (62)                 (222)Effects of expenses not deductible for tax purposes                                                  117                        5Fixed asset differences                                                                                                   6                      17Adjustments to tax charge due to change in rates                                                        (9)                      4Other differences                                                                                                            4                      98                                                                                                                           ————           ————Total tax expense                                                                                                     1,095                 2,317 ———— ————Factors that may affect future tax charges

In  the Spring Budget 2020,  the Government announced that  the previously enacted decrease  in  thecorporate tax rate from 19% to 17% from 1 April 2020 would no longer happen and that rates wouldremain at 19% for the foreseeable future. The new law was substantively enacted post year end by aresolution under the Provisional Collection of Taxes Act 1968 on 17 March 2020. As the new law wassubstantively enacted post year end, the impact of the change has not been reflected in the HistoricalFinancial Information. The expected impact moving forward is not material.

12. Earnings per share

Basic earnings per share is calculated by dividing the net income for the year attributable to ordinaryequity holders after tax by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is not calculated as there are no potential dilutive instruments in issue.

112

The basic and diluted calculations are both based on the following:

Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Profit for the year after tax                                                                                       4,372               10,396 ———— ————                                                                                                                                    No.                    No.

Weighted average number of shares – basic                                                               10                      10

                                                                                                                                £’000                 £’000

Profit per share – basic and diluted                                                                            437                 1,040 ———— ————13. Goodwill Domain name Trademarks Goodwill Total                                                                             £’000                 £’000                 £’000                 £’000

CostAt 1 April 2017                                                             –                        –                    162                    162Additions                                                                    69                        –                    121                    190                                                                        ————           ————           ————           ————At 31 March 2018                                                      69                        –                    283                    352 ———— ———— ———— ————Additions                                                                    55                      50                    330                    435 ———— ———— ———— ————At 31 March 2019                                                    124                      50                    613                    787 ———— ———— ———— ————Accumulated amortisationAt 1 April 2017                                                             –                        –                        –                        –Amortisation charged in the year                                 7                        –                        –                        7                                                                        ————           ————           ————           ————At 31 March 2018                                                        7                        –                        –                        7 ———— ———— ———— ————Amortisation charged in the year                                 9                        3                        –                      12                                                                        ————           ————           ————           ————At 31 March 2019                                                      16                        3                        –                      19 ———— ———— ———— ————Carrying amountAt 1 April 2017                                                             –                        –                    162                    162                                                                        ————           ————           ————           ————At 31 March 2018                                                      62                        –                    283                    345 ———— ———— ———— ————At 31 March 2019                                                    108                      47                    613                    768 ———— ———— ———— ————Goodwill arises on acquisitions where the fair value of the consideration given for the business exceedsthe fair value of the assets acquired and liabilities assumed.

Following acquisition of a business, the directors identify the individual Cash Generating Units (CGUs)acquired and, where possible, allocate the underlying assets acquired and liabilities assumed to eachof those CGUs. The carrying value of goodwill has arisen following the acquisition of subsidiary entities,where  the  trade  and  assets  have  subsequently  been  hived  up  into  this  company,  and  the  relatedinvestment balance transferred to goodwill. The carrying value of goodwill is allocated to the followingcash generating units:

                                                                                                                                                          £’000

Batteries                                                                                                                                               492Vaping                                                                                                                                                  121                                                                                                                                                    ————                                                                                                                                                             613                                                                                                                                                    ————

113

Goodwill arising in the year related to the acquisition of Powerquick, Vape Importers and Sub Ohm thatwere hived up into Supreme Imports Ltd. The goodwill arising in 2018 related to the acquisition of VapeNation Ltd that was hived up into Supreme Imports Ltd.

Impairment testing of goodwill is performed at least annually by reference to value in use calculations,in  line with  the requirements of  IAS 36. These calculations show no reasonably possible scenario  inwhich any of the goodwill balances could be impaired as at the date of transition, 31 March 2018, or 31March 2019. There were no charges for impairment of goodwill in 2019 (2018: nil).

14. Property, plant and equipment Fixtures Plant and and Motor Fashion machinery fittings vehicles hire assets Total                                                                        £’000            £’000            £’000            £’000            £’000

Cost or valuationAt 1 April 2017                                                    519              225                  –            1,486           2,230Additions                                                          1,092              193                  –                   –            1,285                                                                   ————      ————      ————      ————      ————At 31 March 2018                                            1,611              418                  –            1,486           3,515 ———— ———— ———— ———— ————Additions                                                             925                48                32                  –            1,005Disposals                                                             (23)                 –                   –             (180)            (203)                                                                   ————      ————      ————      ————      ————At 31 March 2019                                            2,513              466                32           1,306           4,317 ———— ———— ———— ———— ————Depreciation and impairmentAt 1 April 2017                                                    134              121                  –               156               411Depreciation charged in the year                       172                80                  –               148              400                                                                   ————      ————      ————      ————      ————At 31 March 2018                                               306              201                  –               304               811 ———— ———— ———— ———— ————Depreciation charged in the year                       491               113                  6                 99              709Eliminated on disposal                                            –                   –                   –                (11)              (11)                                                                   ————      ————      ————      ————      ————At 31 March 2019                                               797              314                  6               392           1,509 ———— ———— ———— ———— ————Carrying amountAt 1 April 2017                                                    385              104                  –            1,330           1,819At 31 March 2018                                            1,305              217                  –            1,182           2,704                                                                   ————      ————      ————      ————      ————At 31 March 2019                                            1,716              152                26              914           2,808 ———— ———— ———— ———— ————The depreciation charge for the year has been included in Administrative expenses in the Statement ofComprehensive Income.

15. Investments                                                                                                                                                As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Investment in associates                                                                                              60                      60                                                                                                                           ————           ————                                                                                                                                     60                      60 ———— ————Supreme Imports owned 20% of the share capital of Elena Dolce Limited, with a registered office of 111Deansgate, Manchester, M3 2BQ.

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In addition, at 31 March 2019 Supreme Imports owned 100% of the following subsidiaries, which areincorporated in England and Wales:

•         Vape Nation Limited

•         Battery Force Limited

•         Saira Shoes Limited

•         PowerQuick Limited

•         Sub OHM Juice Limited

•         Supreme 88 Limited (formerly Vape Importers Limited)

The registered office of each subsidiary is 4 Beacon Road, Ashburton Park, Trafford Park, Manchester,M17 1AF.

16. Deferred tax

Deferred tax consists of the following timing differences As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Excess of depreciation over taxable allowances                                                       (113)                   (90)Short term timing differences                                                                                          4                        4Tax losses carried forward                                                                                            63                    117                                                                                                                           ————           ————                                                                                                                                    (46)                    31 ———— ————Movement in deferred tax in the year As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Balance brought forward                                                                                                8                    (46)(Credited)/charged to profit or loss                                                                              (54)                    74Transfer                                                                                                                           –                        3                                                                                                                           ————           ————Balance carried forward                                                                                              (46)                    31 ———— ————The Directors consider that the deferred tax assets in respect of timing differences and depreciation inexcess of capital allowances are recoverable based on the forecast future taxable profits of SupremeImports.

17. Inventories As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Goods for resale                                                                                                    10,307               13,549Raw materials                                                                                                          1,479                 1,484                                                                                                                           ————           ————                                                                                                                              11,786               15,033 ———— ————The Directors believe that the replacement value of inventories at would not be materially different thanbook value.

Inventories at 31 March 2019 are stated after provisions for impairment of £96,000 (2018: £91,000).

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18. Trade and other receivables As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Trade receivables                                                                                                  10,150               10,748Amounts owed by related parties                                                                            1,737                 1,617Directors loan account                                                                                                321                    672Other receivables                                                                                                          46                    231Prepayments                                                                                                               222                    773                                                                                                                           ————           ————                                                                                                                              12,476               14,041 ———— ————The Directors believe that the carrying value of trade and other receivables represents their fair value.In determining the recoverability of  trade receivables, Supreme Imports considers any change in thecredit quality of the receivable from the date credit was granted up to the reporting date.

The movement in provisions for impairment are shown below:

As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Balance at the beginning of the year                                                                            15                      53Charged to the statement of comprehensive income                                                   42                      94Utilisation of provision                                                                                                   (4)                   (95)                                                                                                                           ————           ————Balance at the end of the year                                                                                     53                      52 ———— ————Trade receivables disclosed above include amounts (see below for aged analysis) which are past dueat the reporting date but against which Supreme Imports has not recognised an allowance for doubtfulreceivables because there has not been a significant change in credit quality and the amounts are stillconsidered recoverable.

Ageing of past due but not impaired receivables

As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Current                                                                                                                   10,244               10,663Less than 30 days                                                                                                          –                        –31 – 60 days                                                                                                                (87)                    6661 – 90 days                                                                                                                (35)                     (3)90 days +                                                                                                                      81                      74Less provisions for impairment                                                                                    (53)                   (52)                                                                                                                           ————           ————                                                                                                                              10,150               10,748 ———— ————In determining the recoverability of a trade receivable Supreme Imports considers any change in thecredit quality of the trade receivable from the date credit was initially granted up to the reporting date.The concentration of credit risk is limited due to the customer base being large and unrelated. Creditinsurance is also in place.

Details on Supreme Imports’ credit risk management policies are shown in Note 23. Supreme Importsdoes not hold any collateral as security for its trade and other receivables.

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19. Cash and cash equivalents As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Cash at bank                                                                                                           9,123                 1,694 ———— ————20. Trade and other payables As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Trade payables                                                                                                        3,844                 4,160Accruals and deferred income                                                                                 3,129                 2,645Other tax and social security                                                                                      838                    625Other payables                                                                                                               –                        7Amounts owed to group undertakings                                                                          74                      74                                                                                                                           ————           ————                                                                                                                                7,885                 7,511 ———— ————Trade payables principally consist of amounts outstanding for trade purchases and ongoing costs. Theyare non-interest bearing and are normally settled on 30 to 60 day terms.

The Directors consider that the carrying value of trade and other payables approximates their fair value.Trade and other payables are denominated in Sterling, Euros and US Dollars. Supreme Imports Ltd hasfinancial  risk  management  policies  in  place  to  ensure  that  all  payables  are  paid  within  the  credittimeframe and no interest has been charged by any suppliers as a result of late payment of invoicesduring the period.

21. Borrowings As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

CurrentBank overdraft                                                                                                         8,932                    151Bank loans                                                                                                               4,210                 3,125Other loans                                                                                                              3,570                 1,035IFRS 16 lease liability (Note 22)                                                                                 240                    488                                                                                                                           ————           ————                                                                                                                              16,952                 4,799 ———— ————Non-currentBank term loan                                                                                                               –               16,419IFRS 16 lease liability (Note 22)                                                                                 724                 1,589                                                                                                                           ————           ————                                                                                                                                   724               18,008 ———— ————Total borrowings                                                                                                    17,676               22,807 ———— ————

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The earliest that the lenders of the above borrowings require repayment is as follows:

As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

In less than one year                                                                                             16,952                 4,799Between two and five years                                                                                       724               18,008In more than five years                                                                                                   –                        –                                                                                                                           ————           ————                                                                                                                              17,676               22,807 ———— ————Supreme Imports is funded by external banking facilities provided by HSBC. Current bank borrowingsincludes invoice discounting facilities, which are secured by an assignment of, and fixed charge overthe trade debtors of Supreme Imports. There is also an amount of £151,000 at 31 March 2019 (2018:£8,932,000) due under a bank overdraft. Furthermore, current bank borrowings include an amount of£1,147,000 at 31 March 2019, (2018: £nil) due under a supply chain facility which is secured by fixedand floating charges over all assets of Supreme Imports.

The  total  facilities available were a £8.5m  invoice discounting  facility  (repayable on demand) and a£4.5m  supply  chain  facility  (renewed  each  year).  Therefore  undrawn  but  committed  facilities  at31 March 2019 were £8,612,000 and £3,353,000 respectively (2018: £4,934,000 and £4,500,000).

The  supply  chain  facility  is  utilised  to  provide  short  term  cash  flow  to  settle  liabilities  arising  out  ofpurchases made in the normal course of business. The amount advanced takes into consideration thecash requirements of Supreme Imports and the working capital cycle.

The bank term loan is made up of £12,500,000 repayable in quarterly instalments of £781,000 over a5 year term, and £7,500,000 repaid on maturity. Interest is charged at a rate of 5% over LIBOR. Thebank loan is secured by way of a fixed and floating charge over all assets.

There are three principal covenants attached to the Senior Facilities. These are tested quarterly andinclude gross leverage, cash flow and interest cover.

22. Leases

Amounts recognised in the Statement of Financial Position

The balance sheet shows the following amounts relating to leases:

                                                                                                                                                          £’000

Right-of-use assetsBalance at 1 April 2017                                                                                                                        206New leases recognised in the year                                                                                                      954Depreciation charge for the year                                                                                                        (167)                                                                                                                                                    ————Balance at 31 March 2018                                                                                                                   993New leases recognised in the year                                                                                                   1,481Depreciation charge for the year                                                                                                        (460)                                                                                                                                                    ————Balance at 31 March 2019                                                                                                                2,014                                                                                                                                                    ————The net book value of the right of use assets is made up as follows:

As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Buildings                                                                                                                     867                 1,859Cars                                                                                                                            126                    155                                                                                                                           ————           ————                                                                                                                                   993                 2,014 ———— ————These are included within “Property, plant and equipment” in the Statement of Financial Position.

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As at As at 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000Lease liabilitiesMaturity analysis – contractual undiscounted cash flowsLess than one year                                                                                                     280                    579More than one year, less than two years                                                                   232                    559More than two years, less than three years                                                               194                    559More than three years, less than four years                                                               190                    535More than four years, less than five years                                                                 174                      60More than five years                                                                                                       –                        –                                                                                                                           ————           ————Total undiscounted lease liabilities at year end                                                       1,070                 2,292Finance costs                                                                                                            (106)                 (215)                                                                                                                           ————           ————Total discounted lease liabilities at year end                                                              964                 2,077                                                                                                                           ————           ————Lease liabilities included in the statement of financial positionCurrent                                                                                                                        240                    488Non-current                                                                                                                 724                 1,589                                                                                                                           ————           ————                                                                                                                                   964                 2,077 ———— ————Amounts recognised in the Statement of Comprehensive Income

The Income Statement shows the following amounts relating to leases:

Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                                £’000                 £’000

Depreciation charge – Buildings                                                                                 124                    390Depreciation charge – Cars                                                                                          43                      70                                                                                                                           ————           ————                                                                                                                                   167                    460 ———— ————Interest expense (within finance expense)                                                                   13                      84 ———— ————23. Financial instruments

Supreme  Imports  is  exposed  to  the  risks  that  arise  from  its  financial  instruments.  The  policies  formanaging  those  risks  and  the methods  to measure  them  are  described  in  Notes  3  and  4.  Furtherquantitative  information  in  respect  of  these  risks  is  presented  below  and  throughout  this  HistoricalFinancial Information.

23.1 Capital risk management

Details of Supreme Imports’ capital are shown in Note 24, as well as in the Statement of Changesin Equity.

23.2 Market risk

Competitive pressures remain a principal risk for Supreme Imports. The risk is managed throughfocus  on  quality  of  product  and  service  levels,  coupled with  continuous  development  of  newproducts to offer uniqueness to the customer. Furthermore, Supreme Imports’ focus on offeringits customers a branded product range provides some protection to its competitive position in themarket. Stock obsolescence risk is managed through closely monitoring slow moving lines andprompt  action  to  manage  such  lines  through  the  various  distribution  channels  available  toSupreme Imports.

In addition, Supreme Imports’ operations expose it to a variety of financial risks that include pricerisk,  credit  risk,  liquidity  risk,  foreign  currency  risk  and  interest  rate  cash  flow  risk.  SupremeImports has in place a risk management programme that seeks to limit the adverse effects on the

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financial performance of Supreme Imports by regularly monitoring the financial risks referred toabove.

Given  the  size  of  Supreme  Imports,  the  Directors  have  not  delegated  the  responsibility  ofmonitoring financial risk management to a sub-committee of the board. The policies set by theBoard are implemented by Supreme Imports’ finance department.

23.3 Credit risk

Supreme Imports’ sales are primarily made with credit terms of between 0 and 30 days, exposingSupreme Imports to the risk of non-payment by customers. Supreme Imports has implementedpolicies that require appropriate credit checks on potential customers before sales are made. Theamount  of  exposure  to  any  individual  counterparty  is  subject  to  a  limit,  which  is  reassessedregularly by the board. In addition, Supreme Imports maintains a suitable level of credit insuranceagainst its debtor book. The maximum exposure to credit risk is £2,500 per individual customer,being the insurance excess.

An analysis of past due but not impaired trade receivables is given in Note 18.

23.4 Liquidity risk management

Supreme  Imports  is  funded  by  external  banking  facilities  provided  by  HSBC.  Within  thesefacilities, Supreme Imports actively maintains a mixture of long-term and short-term debt financethat  is designed  to ensure Supreme  Imports has sufficient  available  funds  for operations andplanned  expansions.  This  is  monitored  on  a  monthly  basis,  including  re-forecasts  of  theborrowings required.

23.5 Foreign currency risk management

Supreme  Imports’  activities  expose  it  to  the  financial  risks  of  changes  in  foreign  currencyexchange rates. Supreme Imports’ exposure to foreign currency risk is partially hedged by virtueof invoicing a proportion of its turnover in US Dollars. When necessary, Supreme Imports usesforeign exchange forward contracts to further mitigate this exposure.

The following is a note of the assets and liabilities denominated at each year end in US dollars:

As at As at 31 March 31 March 2018 2019                                                                                                                      £’000                 £’000

Trade receivables                                                                                             350                    444Net cash and overdrafts                                                                                6,334                    957Supply chain facility                                                                                              –               (1,147)Trade payables                                                                                                 930                    472

                                                                                                                           ————           ————                                                                                                                      7,614                    726 ———— ————The  effect  of  a  20% strengthening  of  Pound  Sterling  at  31  March  2019  on  the  foreigndenominated financial  instruments carried at that date would, all variables held constant, haveresulted in a decrease to total comprehensive income for the year and a decrease to net assetsof £121,000 (2018: £1,269,000 decrease). A 20% weakening of the exchange rate on the samebasis, would have resulted in an increase to total comprehensive income and an increase to netassets of £181,000 (2018: £1,904,000 increase).

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The following is a note of the assets and liabilities denominated at each year end in Euros:

As at As at 31 March 31 March 2018 2019                                                                                                                      £’000                 £’000

Trade receivables                                                                                             114                    253Net cash and overdrafts                                                                                     94                        1Trade payables                                                                                                (190)                 (406)

                                                                                                                           ————           ————                                                                                                                           18                  (152) ———— ————The  effect  of  a  20% strengthening  of  Pound  Sterling  at  31  March  2019  on  the  foreigndenominated financial  instruments carried at that date would, all variables held constant, haveresulted in an increase to total comprehensive income for the year and an increase to net assetsof £25,000 (2018: £3,000 decrease). A 20% weakening of the exchange rate on the same basis,would have resulted in a decrease to total comprehensive income and a decrease to net assetsof £38,000 (2018: £4,000 increase).

Derivative financial instruments – Forward contracts

Supreme Imports mitigates the exchange rate risk for certain foreign currency trade debtors andcreditors  by  entering  into  forward  currency  contracts.  Supreme  Imports’  forex  policy  is  topurchase forward contracts to mitigate changes in spot rates, based on the timing of purchasesto be made. Management forecast the timing of purchases and make assumptions relating to theexchange rate at which Supreme Imports costs  its products and  take out  forward contracts  tomitigate fluctuations to an acceptable level. At 31 March 2019, the outstanding contracts maturebetween 1 and 12 months of the year end, (2018: 0 and 16 months). At 31 March 2019 SupremeImports was committed to buy $12,709,605 (2018: $16,983,340) and sell $nil (2018: $nil) in thenext financial year.

The forward currency contracts are measured at fair value using the relevant exchange rates forGBP:USD and GBP:EUR. The fair value of the contracts at 31 March 2019 is a liability of £nil(2018: £778,000 liability). During the year ended 31 March 2019, a loss of £nil (2018: £627,000loss) was recognised in cost of sales for changes in the fair value of the forward foreign currencycontracts.

Forward currency contracts are valued using level 2 inputs. The valuations are calculated usingthe year end exchange rates for the relevant currencies which are observable quoted values atthe year-end dates. Valuations are determined using the hypothetical derivative method whichvalues the contracts based on the changes in the future cashflows based on the change in valueof the underlying derivative.

23.6 Interest rate cash flow risk

Supreme Imports’ interest bearing liabilities relate to its variable rate banking facilities. SupremeImports has a policy of keeping the rates associated with funding under review in order to reactto any adverse changes in the marketplace that would impact on the interest rates in place. Theeffect  of  a  1%  increase  in  interest  rates would  have  resulted  in  a  decrease  in  net  assets  of£207,000 (2018: £167,000 decrease).

23.7 Price risk

Supreme  Imports’  profitability  is  affected  by  price  fluctuations  in  the  sourcing  of  its  products.Supreme  Imports  continually monitors  the  price  and  availability  of  materials  but  the  costs  ofmanaging the exposure to price risk exceed any potential benefits given the extensive range ofproducts  and  suppliers.  The  Directors  will  revisit  the  appropriateness  of  this  policy  shouldSupreme Imports’ operations change in size or nature.

121

23.8 Maturity of financial assets and liabilities

All of Supreme Imports’ non-derivative financial liabilities and its financial assets at the reportingdate  are  either  payable  or  receivable  within  one  year,  except  for  borrowings  as  disclosed  inNote 21.

23.9 Summary of financial assets and liabilities by category

The carrying amount of  financial assets and  liabilities  recognised may also be categorised asfollows:

As at As at 31 March 31 March 2018 2019                                                                                                                      £’000                 £’000

Financial assetsFinancial assets measured at amortised costTrade and other receivables                                                                        12,254               13,268Cash and cash equivalents                                                                           9,123                 1,694

                                                                                                                           ————           ————                                                                                                                    21,377               14,962Financial liabilitiesFinancial liabilities measured at amortised costNon-current:Borrowings                                                                                                      (724)            (18,008)Current:Borrowings                                                                                                 (16,952)              (4,799)Trade and other payables                                                                            (3,918)              (4,241)Accruals                                                                                                        (3,129)              (2,645)

                                                                                                                           ————           ————                                                                                                                   (24,723)            (29,693)

Financial liabilities measured at fair value through profit and lossDerivative financial instruments                                                                      (778)                      –

                                                                                                                           ————           ————                                                                                                                        (778)                      –

                                                                                                                           ————           ————Net financial assets and liabilities                                                                (4,124)            (14,731)Non-financial assets and liabilitiesPlant, property and equipment                                                                      2,704                 2,808Right of use assets                                                                                           993                 2,014Goodwill and other intangible assets                                                               345                    768Investments                                                                                                        60                      60Inventory                                                                                                      11,786               15,033Prepayments and accrued income                                                                   222                    773Deferred tax (liability)/asset                                                                               (46)                    31Other taxation and social security                                                                   (838)                 (625)Current tax asset                                                                                                53                        –Current tax liability                                                                                        (1,085)              (1,953)

                                                                                                                           ————           ————                                                                                                                    14,194               18,909

                                                                                                                           ————           ————Total deficit                                                                                                   10,070                 4,178 ———— ————

24. Share capital As at As at 31 March 31 March 2018 2019                                                                                                                                       £                        £

Ordinary shares of £1                                                                                                   10                      10                                                                                                                           ————           ————

122

Number of shares authorised and in issue As at As at 31 March 31 March 2018 2019                                                                                                                                    No.                    No.

Ordinary shares of £1                                                                                                   10                      10                                                                                                                           ————           ————

Rights of share capital

Ordinary  shares  carry  rights  to  dividends  and  other  distributions  from  Supreme  Imports  as  well  ascarrying voting rights.

Dividends

Dividends of £16,288,000 (2018: £7,711,000) were declared in the year. This amounted to £1,628,800per share (2018: £771,100).

25. Ultimate controlling party

At  the  year-end,  the  parent  company was  Supreme  Limited,  which  is  under  the  ultimate  control  ofSandy Chadha due to his shareholding in that company.

26. Other financial commitments

See note 23.5 or details of the financial commitments under US dollar forward exchange contracts.

27. Related party transactions

27.1 Remuneration of key personnel

Remuneration of key management personnel, considered to be the Directors of Supreme Importsand members of the senior management team is as follows:

Year Ended Year Ended 31 March 31 March 2018 2019                                                                                                                      £’000                 £’000

Short-term employee benefits                                                                          415                    362Post-employment benefits                                                                                  11                      13

                                                                                                                           ————           ————Total compensation                                                                                           426                    375 ———— ————

27.2 Transactions and balances with key personnel As at As at 31 March 31 March 2018 2019                                                                                                                      £’000                 £’000

Loan balances with Directors:Balance outstanding from director                                                                    321                    672 ———— ————The above balance as at 31 March 2018 was repaid in the year ended 31 March 2019 throughthe payment of a dividend. Total dividends declared were £16,288,000, of which £321,000 wasallocated to the Directors loan account and £15,967,000 was paid in cash.

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27.3 Transactions and balances with related companies and businesses Year Ended/ Year Ended/ As at As at 31 March 31 March 2018 2019                                                                                                                      £’000                 £’000

Transactions with related companies:Rent paid to Chadha Properties Limited                                                          180                    180Interest charged to Nash Peters Limited                                                              –                      76Loans provided to Nash Peters Limited                                                               –                      31 ———— ————Balances with related companies:Amounts owed by Nash Peters Limited                                                        1,584                 1,616Amounts owed by SI Jersey Limited                                                                153                        –Amounts owed to SI Jersey Limited                                                                 (74)                   (74) ———— ————The above companies are related due to common control and Directors.

Amounts owed by Nash Peters Limited are due for repayment on demand and interest is chargedon the outstanding balance at a rate of 5%.

28. Analysis and reconciliation of net debt Other 1 April non-cash 31 March 2017 Acquisitions changes Cashflow 2018                                                                   £’000                 £’000            £’000            £’000            £’000

Cash at bank and in hand                          1,879                        7                   –            7,237           9,123Current borrowings                                    (1,292)                      –             (294)       (15,366)       (16,952)Non-current borrowings                             (2,030)                      –             (673)          1,979             (724)                                                              ————           ————      ————      ————      ————Net debt                                                     (1,443)                      7             (967)         (6,150)         (8,553)                                                              ————           ————      ————      ————      ———— Other 1 April non-cash 31 March 2018 Acquisitions changes Cashflow 2019                                                                   £’000                 £’000            £’000            £’000            £’000

Cash at bank and in hand                          9,123                        –                   –          (7,429)          1,694Current borrowings                                  (16,952)                      –             (700)        12,853          (4,799)Non-current borrowings                                (724)                      –             (865)       (16,419)       (18,008)                                                              ————           ————      ————      ————      ————Net debt                                                     (8,553)                      –          (1,565)       (10,995)       (21,113)                                                              ————           ————      ————      ————      ————29. Post balance date events

Following the year end, Supreme Imports Limited acquired 100% of the share capital of GT DivisionsLimited  for  consideration of  £1,071,000. The book value of  the assets acquired was £121,000. Thecompany is in the process of performing a detailed PPA exercise including calculation of the fair valuesof the assets acquired following which the intangible asset of £950,000 will be allocated amongst theacquired intangibles, expected to be brand, customer relationships, other intangibles, and goodwill.

On  22  October  2020,  an  accident  took  place  in  the  manufacturing  facility  at  VN  Labs  Limited,  asubsidiary  of  the  Company,  that  resulted  in  a  machine  operator  being  injured.  The  Companyimmediately contacted the Health & Safety Executive (Britain’s national regulator for workplace health& safety) who are now undertaking an  investigation. The Company continues  to make all  resourcesavailable to the HSE and will co-operate until the matter is concluded. There is not expected to be anymaterial financial impact on the Company.

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30. Reconciliation from UK GAAP to IFRS

From 1 April 2017 Supreme Imports has adopted International Financial Reporting Standards (IFRS) inthe preparation of this Historical Financial Information, other than as noted under ‘Basis of Preparation’in  Note  1.  The  main  items  contributing  to  the  change  in  financial  information  compared  with  thatreported under UK GAAP as at the transition date are shown below. There were no other accountingpolicy changes other than the impact of the below items.

IFRS 16 – Leases

As explained in accounting policy 2.9 Supreme Imports has adopted IFRS 16. This has resulted in therecognition of a right of use asset and liability on the statement of financial position. The statement ofcomprehensive income has been adjusted to remove the rent expense and replace it with depreciationcharged on the right of use asset and interest accrued on the right of use liability.

IFRS 3 – Business Combinations

In accordance with the requirements of IFRS 3, Business Combinations, goodwill generated as part ofan  acquisition  is  not  amortised,  instead  being  reviewed  annually  for  indicators  of  impairment.Consequently, the net book value of goodwill is frozen as at the value at 1 April 2017.

The  figures  included  as  previously  reported  have  been  re-presented  to  better  reflect  the  nature  ofcertain items within the financial statements as follows:

IAS 12 – Income taxes

In accordance with IAS 12 deferred tax assets are disclosed as non-current.

Reclasses

Supreme Imports has adjusted certain costs which did not directly relate to the cost of product to bepresented in administration expenses rather than cost of sales.

STATEMENT OF CASH FLOWS

As  a  result  of  IFRS  16  lease  payments,  which  were  previously  recorded  in  the  statement  ofcomprehensive  income  as  a  rent  expense,  are  now  shown  on  the  statement  of  cash  flows  asdepreciation and finance costs within net cash from operations, and  lease payments within net cashused in financing activities.

There are no other material differences between the cashflow statement presented under IFRS and thatpresented under UK GAAP.

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STATEMENT OF COMPREHENSIVE INCOME RECONCILIATIONS As previously reported Under IFRS Year Ended Year Ended 31 March 31 March 2018 IFRS 16 IFRS 3 Reclasses 2018                                                    £’000                 £’000                 £’000                 £’000                 £’000

Revenue                                    72,854                        –                        –                        –               72,854Cost of sales                            (58,228)                      –                        –                    148             (58,080) ———— ———— ———— ———— ————Gross profit                              14,626                        –                        –                    148               14,774Administrationexpenses                                (8,846)                    33                      39                  (148)              (8,922)

———— ———— ———— ———— ————Operating profit                         5,780                      33                      39                        –                 5,852

Adjusted earningsbefore tax,depreciation,amortisation andexceptional items                   7,499                    200                        –                        –                 7,699

Depreciation                                  (400)                 (167)                      –                        –                  (567)Amortisation                                    (46)                      –                      39                        –                      (7)Exceptional items                          (953)                      –                        –                        –                  (953)Net loss fromtransactions innon-hedgingforeign exchangederivative contracts                   (320)                      –                        –                        –                  (320)

Operating profit                         5,780                      33                      39                        –                 5,852Finance income                                  –                        –                        –                        –                        –Finance costs                                (372)                   (13)                      –                        –                  (385) ———— ———— ———— ———— ————Profit before taxation                5,408                      20                      39                        –                 5,467Income tax                                 (1,095)                      –                        –                        –               (1,095) ———— ———— ———— ———— ————Profit for the year                      4,313                      20                      39                        –                 4,372

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STATEMENT OF COMPREHENSIVE INCOME RECONCILIATIONS As previously reported Under IFRS Year Ended Year Ended 31 March 31 March 2019 IFRS 16 IFRS 3 Reclasses 2019                                                    £’000                 £’000                 £’000                 £’000                 £’000

Revenue                                    80,150                        –                        –                        –               80,150Cost of sales                            (58,539)                      –                        –                 1,076             (57,463) ———— ———— ———— ———— ————Gross profit                              21,611                        –                        –                 1,076               22,687Administration expenses            (8,385)                     (8)                    66               (1,076)              (9,403) ———— ———— ———— ———— ————Operating profit                       13,226                      (8)                    66                        –               13,284

Adjusted earningsbefore tax,depreciation,amortisation andexceptional items                 14,383                    452                        –                        –               14,835

Depreciation                                  (709)                 (460)                      –                        –               (1,169)Amortisation                                    (78)                      –                      66                        –                    (12)Exceptional items                          (370)                      –                        –                        –                  (370)Net loss fromtransactions innon-hedgingforeign exchangederivative contracts                         –                        –                        –                        –                        –

Operating profit                       13,226                      (8)                    66                        –               13,284Finance income                                28                        –                        –                        –                      28Finance costs                                (515)                   (84)                      –                        –                  (599) ———— ———— ———— ———— ————Profit before taxation              12,739                    (92)                    66                        –               12,713Income tax                                 (2,317)                      –                        –                        –               (2,317) ———— ———— ———— ———— ————Profit for the year                    10,422                    (92)                    66                        –               10,396

127

STATEMENT OF FINANCIAL POSITION RECONCILIATIONS As previously Under IFRS reported at as at 1 April 2017 IFRS 16 IFRS 3 Reclasses 1 April 2017                                                    £’000                 £’000                 £’000                 £’000                 £’000

AssetsGoodwill and otherintangibles                                  162                        –                        –                        –                    162

Property, plant andequipment                                1,819                        –                        –                        –                 1,819

Right of use assets                            –                    206                        –                        –                    206Investments                                        –                        –                        –                        –                        –Deferred tax                                       –                        –                        –                        8                        8 ———— ———— ———— ———— ————Total non-currentassets                                      1,981                    206                        –                        8                 2,195

———— ———— ———— ———— ————Current assetsInventories                                   8,376                        –                        –                        –                 8,376Trade and otherreceivables                            13,224                        –                        –                    (17)             13,207

Corporation taxrecoverable                                     –                        –                        –                        9                        9

Cash and cashequivalents                               1,879                        –                        –                        –                 1,879

———— ———— ———— ———— ————Total current assets                23,479                        –                        –                      (8)             23,471 ———— ———— ———— ———— ————Total assets                              25,460                    206                        –                        –               25,666 ———— ———— ———— ———— ————LiabilitiesCurrent liabilitiesBorrowings                                  1,146                    146                        –                        –                 1,292Trade and otherpayables                                  8,935                        –                        –               (1,527)               7,408

Derivative financialinstruments                                     –                        –                        –                    151                    151

Current tax                                         –                        –                        –                 1,376                 1,376 ———— ———— ———— ———— ————Total currentliabilities                               10,081                    146                        –                        –               10,227

———— ———— ———— ———— ————Net current assets                   13,398                  (146)                      –                      (8)             13,244 ———— ———— ———— ———— ————Borrowings                                  1,979                      51                        –                        –                 2,030Deferred tax liability                            –                        –                        –                        –                        – ———— ———— ———— ———— ————Total non-currentliabilities                                 1,979                      51                        –                        –                 2,030

———— ———— ———— ———— ————Total liabilities                          12,060                    197                        –                        –               12,257 ———— ———— ———— ———— ————Net assets                                13,400                        9                        –                        –               13,409 ————           ————           ————           ————           ————EquityShare capital                                      –                        –                        –                        –                        –Retained earnings                     13,400                        9                        –                        –               13,409 ———— ———— ———— ———— ————Total equity                               13,400                        9                        –                        –               13,409 ————           ————           ————           ————           ————

128

STATEMENT OF FINANCIAL POSITION RECONCILIATIONS As previously Under IFRS reported at as at 31 March 31 March 2018 IFRS 16 IFRS 3 Reclasses 2018                                                    £’000                 £’000                 £’000                 £’000                 £’000

AssetsGoodwill and otherintangibles                                  306                        –                      39                        –                    345

Property, plant andequipment                                2,704                        –                        –                        –                 2,704

Right of use assets                            –                    993                        –                        –                    993Investments                                      60                        –                        –                        –                      60Deferred tax                                       –                        –                        –                        –                        – ———— ———— ———— ———— ————Total non-currentassets                                      3,070                    993                      39                        –                 4,102

———— ———— ———— ———— ————Current assetsInventories                                 11,786                        –                        –                        –               11,786Trade and otherreceivables                            12,529                        –                        –                    (53)             12,476

Corporation taxrecoverable                                     –                        –                        –                      53                      53

Cash and cashequivalents                               9,123                        –                        –                        –                 9,123

———— ———— ———— ———— ————Total current assets                33,438                        –                        –                        –               33,438 ———— ———— ———— ———— ————Total assets                              36,508                    993                      39                        –               37,540 ———— ———— ———— ———— ————LiabilitiesCurrent liabilitiesBorrowings                                16,712                    240                        –                        –               16,952Trade and otherpayables                                  9,748                        –                        –               (1,863)               7,885

Derivative financialinstruments                                     –                        –                        –                    778                    778

Current tax                                         –                        –                        –                 1,085                 1,085 ———— ———— ———— ———— ————Total currentliabilities                               26,460                    240                        –                        –               26,700

———— ———— ———— ———— ————Net current assets                     6,978                  (240)                      –                        –                 6,738 ———— ———— ———— ———— ————Borrowings                                         –                    724                        –                        –                    724Deferred tax liability                          46                        –                        –                        –                      46 ———— ———— ———— ———— ————Total non-currentliabilities                                      46                    724                        –                        –                    770

———— ———— ———— ———— ————Total liabilities                          26,506                    964                        –                        –               27,470 ———— ———— ———— ———— ————Net assets                                10,002                      29                      39                        –               10,070 ————           ————           ————           ————           ————EquityShare capital                                      –                        –                        –                        –                        –Retained earnings                     10,002                      29                      39                        –               10,070 ———— ———— ———— ———— ————Total equity                               10,002                      29                      39                        –               10,070 ————           ————           ————           ————           ————

129

STATEMENT OF FINANCIAL POSITION RECONCILIATIONS As previously Under IFRS reported at as at 31 March 31 March 2019 IFRS 16 IFRS 3 Reclasses 2019                                                    £’000                 £’000                 £’000                 £’000                 £’000

AssetsGoodwill and otherintangibles                                  663                        –                    105                        –                    768

Property, plant andequipment                                2,808                        –                        –                        –                 2,808

Right of use assets                            –                 2,014                        –                        –                 2,014Investments                                      60                        –                        –                        –                      60Deferred tax                                       –                        –                        –                      31                      31 ———— ———— ———— ———— ————Total non-currentassets                                      3,531                 2,014                    105                      31                 5,681

———— ———— ———— ———— ————Current assetsInventories                                 15,033                        –                        –                        –               15,033Trade and otherreceivables                            14,072                        –                        –                    (31)             14,041

Corporation taxrecoverable                                     –                        –                        –                        –                        –

Cash and cashequivalents                               1,694                        –                        –                        –                 1,694

———— ———— ———— ———— ————Total current assets                30,799                        –                        –                    (31)             30,768 ———— ———— ———— ———— ————Total assets                              34,330                 2,014                    105                        –               36,449 ———— ———— ———— ———— ————LiabilitiesCurrent liabilitiesBorrowings                                   4,311                    488                        –                        –                 4,799Trade and otherpayables                                  9,464                        –                        –               (1,953)               7,511

Derivative financialinstruments                                     –                        –                        –                        –                        –

Current tax                                         –                        –                        –                 1,953                 1,953 ———— ———— ———— ———— ————Total currentliabilities                               13,775                    488                        –                        –               14,263

———— ———— ———— ———— ————Net current assets                   17,024                  (488)                      –                    (31)             16,505 ———— ———— ———— ———— ————Borrowings                                16,419                 1,589                        –                        –               18,008Deferred tax liability                            –                        –                        –                        –                        – ———— ———— ———— ———— ————Total non-currentliabilities                               16,419                 1,589                        –                        –               18,008

———— ———— ———— ———— ————Total liabilities                          30,194                 2,077                        –                        –               32,271 ———— ———— ———— ———— ————Net assets                                  4,136                    (63)                  105                        –                 4,178 ————           ————           ————           ————           ————EquityShare capital                                      –                        –                        –                        –                        –Retained earnings                       4,136                    (63)                  105                        –                 4,178 ———— ———— ———— ———— ————Total equity                                 4,136                    (63)                  105                        –                 4,178 ————           ————           ————           ————           ————

130

PART VI

UNAUDITED INTERIM FINANCIAL INFORMATION OF THE GROUP

SECTION A: ACCOUNTANT’S REPORT ON THE UNAUDITED INTERIM FINANCIALINFORMATION OF THE GROUP

                                                                                                                 BDO LLP

                                                                                                    3 Hardman Street

                                                                                                             Manchester

M3 3AT

The Directors

Supreme plc

4 Beacon Road

Ashburton Park

Trafford Park

Manchester

M17 1AF

Grant Thornton UK LLP

30 Finsbury Square

London

EC2A 1AG                                                                                                                       27 January 2021 

Ladies and Gentlemen

Supreme plc (the “Company”)and its subsidiary undertakings (together, the “Group”)

Introduction

We report on the interim financial information set out in Section B of Part VI. This financial information

has been prepared for  inclusion in the admission document dated 27 January 2021 of the Company

(the “Admission Document”) on the basis of  the accounting policies set out  in note 2 to the financial

information. This report is required by paragraph (a) of Schedule Two of the AIM Rules for Companies

and is given for the purpose of complying with that paragraph and for no other purpose. We have not

audited or reviewed the financial information for the six months ended 30 September 2019 which has

been included for comparative purposes only and accordingly do not express an opinion thereon.

Responsibilities

The  directors  of  the  Company  are  responsible  for  preparing  the  interim  financial  information  in

accordance with International Accounting Standard 34 ‘’Interim Financial Reporting’’, as adopted by the

European Union.

It is our responsibility to express a conclusion based on our review of the interim financial information.

Save  for  any  responsibility  arising  under  paragraph  (a)  of  Schedule  Two  of  the  AIM  Rules  for

Companies to any person as and to the extent there provided to the fullest extent permitted by the law

we do not assume any responsibility and will not accept any liability to any other person for any loss

suffered by any such other person as a result of, arising out of, or in connection with this report or our

statement, required by and given solely for the purposes of complying with Schedule Two of the AIM

Rules for Companies, consenting to its inclusion in the Admission Document.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and

Ireland) 2410  “Review of  Interim Financial  Information Performed by  the  Independent Auditor of  the

Entity” (ISRE 2410) issued by the Financial Reporting Council for use in the United Kingdom.

131

A review of interim financial information consists of making enquiries, primarily of persons responsible

for financial and accounting matters, and applying analytical and other review procedures. A review is

substantially  less  in  scope  than  an  audit  conducted  in  accordance  with  International  Standards  on

Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware

of all significant matters that might be  identified  in an audit. Accordingly, we do not express an audit

opinion.

Our  work  has  not  been  carried  out  in  accordance  with  auditing  or  other  standards  and  practices

generally accepted in the United States of America or other jurisdictions outside the United Kingdom

and  accordingly  should  not  be  relied  upon  as  if  it  had  been  carried  out  in  accordance  with  those

standards and practices.

Conclusion

Based  on  our  review,  nothing  has  come  to  our  attention  that  causes  us  to  believe  that  the  interim

financial  information  for  the  six  months  ended  30  September  2020  is  not  prepared,  in  all  material

respects, in accordance with International Accounting Standard 34, as adopted by the European Union.

Declaration

For the purposes of Paragraph (a) of Schedule Two of the AIM Rules for Companies we are responsible

for this report as part of the Admission Document and declare that, to the best of our knowledge, the

information contained in this report is in accordance with the facts and makes no omission likely to affect

its import. This declaration is included in the Admission Document in compliance with Schedule Two of

the AIM Rules for Companies.

Yours faithfully

BDO LLPChartered Accountants

BDO LLP  is  a  limited  liability  partnership  registered  in England  and Wales  (with  registered  number

OC305127)

132

SECTION B: UNAUDITED INTERIM FINANCIAL INFORMATION OF THE GROUP

Unaudited Consolidated Statement of Comprehensive Income                                                                                                 6 months 6 months ended ended Year ended 30 September 30 September 31 March 2020 2019 2020                                                                               Note                 £’000                 £’000                 £’000

Revenue                                                                      3               56,336               39,533               92,329

Cost of sales                                                                               (42,054)            (28,106)            (65,509)                                                                                                 ————           ————           ————Gross profit                                                                                 14,282 11,427 26,820Administration expenses                                                               (7,120)              (5,499)            (12,827)                                                                                                 ————           ————           ————Operating profit                                                                            7,162 5,928 13,993Adjusted EBITDA1                                                                         8,398 6,955 16,209Depreciation                                                                                     (943)                 (730)              (1,548)

Amortisation                                                                                       (51)                      –                    (25)

Exceptional items                                                        4                  (242)                 (297)                 (643)

Operating profit                                                                            7,162 5,928 13,993                                                                                                 ————           ————           ————Finance income                                                                                     –                        –                        3

Finance costs                                                                                   (374)                 (410)                 (783)                                                                                                 ————           ————           ————Profit before taxation                                                                   6,788 5,518 13,213Income tax                                                                   5               (1,341)                 (981)              (2,318)                                                                                                 ————           ————           ————Profit for the period/year                                                             5,447 4,537 10,895                                                                                                 ————           ————           ————Other comprehensive incomeCurrency translation differences                                                         56                        –                      (9)                                                                                                 ————           ————           ————

Total comprehensive income forthe period/year                                                                          5,503 4,537 10,886

                                                                                                 ————           ————           ————Earnings per share – basic                                          6                 £0.05                 £0.04                 £0.10

Earnings per share – diluted                                       6                 £0.05                 £0.04                 £0.10

                                                                                                 ————           ————           ————Note 1: Adjusted EBITDA, which is defined as profit before finance income, finance costs, tax, depreciation, amortisation, andexceptional items is a non-GAAP metric used by management and is not an IFRS disclosure.

All results derive from continuing operations.

133

Unaudited Consolidated Statement of Financial Position                                                                                                                   As at As at As at 30 September 30 September 31 March 2020 2019 2020                                                                                                       £’000                 £’000                 £’000

AssetsGoodwill and other intangibles                                                       1,852                    770                 1,778

Property, plant and equipment                                                       3,516                 3,270                 3,458

Right of use asset                                                                          1,239                 1,753                 1,495

Investments                                                                                           7                      60                        7                                                                                                 ————           ————           ————Total non-current assets 6,614 5,853 6,738                                                                                                 ————           ————           ————

Current assetsInventories                                                                                    19,799               14,805               14,458

Trade and other receivables                                                        22,445               15,583               16,739

Derivative financial instruments                                                            –                        –                    209

Income tax recoverable                                                                         –                        –                        9

Cash and cash equivalents                                                            3,494                 2,910                 6,718                                                                                                 ————           ————           ————Total current assets 45,738 33,298 38,133                                                                                                 ————           ————           ————Total assets 52,352 39,151 44,871                                                                                                 ————           ————           ————

LiabilitiesCurrent liabilitiesBorrowings                                                                                     7,209                 7,464                 7,181

Trade and other payables                                                            19,163                 5,854               13,682

Income tax payable                                                                        2,667                 3,432                 2,340                                                                                                 ————           ————           ————Total current liabilities 29,039 16,750 23,203                                                                                                 ————           ————           ————Net current assets 16,699 16,548 14,930                                                                                                 ————           ————           ————

Borrowings                                                                                   14,563               13,686               17,413

Deferred tax liability                                                                           183                        –                    191                                                                                                 ————           ————           ————Total non-current liabilities 14,746 13,686 17,604                                                                                                 ————           ————           ————Total liabilities 43,785 30,436 40,807                                                                                                 ————           ————           ————Net assets 8,567 8,715 4,064                                                                                                 ————           ————           ————EquityShare capital                                                                                 11,001               11,001               11,001

Merger reserve                                                                            (22,000)            (22,000)            (22,000)

Retained earnings                                                                        19,566               19,714               15,063                                                                                                 ————           ————           ————Total equity 8,567 8,715 4,064                                                                                                 ————           ————           ————

134

Unaudited Consolidated Statement of Changes in Equity                                                                                      Share Merger Retained Total capital reserve earnings equity                                                                             £’000                 £’000                 £’000                 £’000

As at 1 April 2019                                              11,001             (22,000)             15,177                 4,178Profit for the year                                                         –                        –               10,895               10,895Other comprehensive income                                      –                        –                      (9)                     (9) ————           ————           ————           ————Total comprehensive income for the year                    – – 10,886 10,886 ————           ————           ————           ————

Transactions with shareholders:Dividends                                                                     –                        –              (11,000)            (11,000) ————           ————           ————           ————As at 31 March 2020 11,001 (22,000) 15,063 4,064                                                                        ————           ————           ————           ————As at 1 April 2019                                              11,001             (22,000)             15,177                 4,178Profit for the period                                                      –                        –                 4,537                 4,537 ————           ————           ————           ————Total comprehensive income for the period                –                        –                 4,537                 4,537 ————           ————           ————           ————As at 30 September 2019 11,001 (22,000) 19,714 8,715                                                                        ————           ————           ————           ————As at 1 April 2020                                              11,001             (22,000)             15,063                 4,064Profit for the period                                                      –                        –                 5,447                 5,447Other comprehensive income                                      –                        –                      56                      56 ————           ————           ————           ————Total comprehensive income for the period                – – 5,503 5,503 ————           ————           ————           ————

Transactions with shareholders:Dividends                                                                     –                        –               (1,000)              (1,000) ————           ————           ————           ————As at 30 September 2020 11,001 (22,000) 19,566 8,567                                                                        ————           ————           ————           ————

135

Unaudited Consolidated Statement of Cash Flows                                                                                                            6 months 6 months ended ended Year ended 30 September 30 September 31 March 2020 2019 2020                                                                                                       £’000                 £’000                 £’000

Net cash flow from operating activitiesProfit for the period                                                                        5,447                 4,537               10,895

Adjustments for:Amortisation of intangible assets                                                        51                        –                      25

Depreciation of tangible assets                                                         943                    730                 1,548

Fixed asset investment written off                                                         –                        –                      60

Finance income                                                                                     –                        –                      (3)

Finance costs                                                                                    374                    410                    783

Amortisation of capitalised finance costs                                              –                        –                    149

Income tax expense                                                                       1,341                    981                 2,318

Working capital adjustments(Increase)/decrease in inventories                                                (5,341)                  228                 2,472

Increase in trade and other receivables                                       (5,441)              (2,214)                 (942)

Decrease in trade and other payables                                           4,304               (2,007)               1,442

Taxation (paid)/received                                                                (1,000)                  553               (1,716)                                                                                                 ————           ————           ————Net cash (used in)/generated from operations 678 3,218 17,031                                                                                                 ————           ————           ————

Cash flows used in investing activitiesPurchase of intangible fixed assets                                                 (125)                     (2)                   (26)

Purchase of property, plant and equipment                                     (745)                 (931)              (1,655)

Purchase of subsidiaries net of cash acquired                                     –                        –               (3,547)

Directors loan account movement                                                        2                    (23)                      –

Interest received                                                                                    –                        –                        3                                                                                                 ————           ————           ————Net cash used in investing activities (868) (956) (5,225)                                                                                                 ————           ————           ————

Cash flows used in financing activitiesDrawdown of loans                                                                               –                        –                 6,000

Repayment of loans                                                                      (2,593)              (1,867)              (4,066)

Drawdown of other loans                                                                      –                        –                 3,735

Payment of deferred consideration                                                  (195)                      –                        –

Dividends paid                                                                              (1,000)                      –              (11,000)

Finance costs paid                                                                           (360)                 (384)                 (691)

Lease payments                                                                               (283)                 (283)                 (579)                                                                                                 ————           ————           ————Net cash used in financing activities (4,431) (2,534) (6,601)                                                                                                 ————           ————           ————

Net decrease in cash and cash equivalents                             (4,621)                 (272)               5,205Cash and cash equivalents brought forward                            6,718                 1,543                 1,543Foreign exchange                                                                                 –                        –                    (30)                                                                                                 ————           ————           ————Cash and cash equivalents carried forward 2,097 1,271 6,718                                                                                                 ————           ————           ————Cash and cash equivalents                                                            3,494                 2,910                 6,718

Bank overdraft                                                                               (1,397)              (1,639)                      –                                                                                                 ————           ————           ————                                                                                                       2,097                 1,271                 6,718

                                                                                                 ————           ————           ————

136

Notes to the Unaudited Interim Financial Information

1. Basis of preparation

The  interim  financial  information of Supreme Limited  for  the six months ended 30 September 2020,

which is unaudited, has been prepared in accordance with International Financial Reporting Standards

(‘IFRS’) and the accounting policies adopted by Supreme Limited and set out in Section B of Part IV to

this  Admission  Document.  Supreme  Limited  does  not  anticipate  any  change  in  these  accounting

policies for the year ending 31 March 2021.

The unaudited  interim  financial  information has been prepared on a going  concern basis  under  the

historical cost convention. The unaudited interim financial information is presented in pounds sterling

and all values are rounded to the nearest thousand pounds (£’000), except where otherwise indicated.

The  financial  information,  including  for  the year ended 31 March 2020, does not constitute statutory

accounts  for  the  purposes  of  section  434  of  the  Companies Act  2006.  The  statutory  accounts  for

31 March  2020  have  been  delivered  to  the  Registrar  of  Companies.  The  auditors’  report  on  those

accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain

a statement under 498(2) or 498(3) of the Companies Act 2006.

This unaudited interim financial information presents the financial track record of Supreme Limited for

the interim periods ended 30 September 2019 and 2020 and is prepared for the purposes of admission

to AIM, a market operated by the London Stock Exchange. This unaudited interim financial information

has  been  prepared  in  accordance  with  the  requirements  of  the AIM  Rules  for  Companies,  IAS  34

“Interim Financial Reporting” and in accordance with this basis of preparation summarised above.

2. Summary of significant accounting policies

The principal  accounting policies adopted are  set  out in  this Section B of Part VI to  this Admission

Document except as follows:

2.1 Taxation

Taxes on  income in  the  interim periods are accrued using management’s best estimate of  the

weighted average annual tax rate that would be applicable to expected total annual earnings.

3. Segmental analysis

The Chief Operating Decision Maker  (“CODM”)  has  been  identified  as  the  Board  of  Directors.  The

Board reviews the Company’s internal reporting in order to assess performance and allocate resources.

No  balance  sheet  analysis  is  available  by  segment  or  reviewed  by  the  CODM.  The  Board  has

determined that the operating segments, based on these reports, are the sale of:

•         batteries;

•         lighting;

•         vaping;

•         sports nutrition & wellness; and

•         branded household consumer goods.

137

                                                                     Branded 6 months Sports household ended 30 nutrition consumer September Batteries Lighting Vaping & wellness goods 2020                                                    £’000            £’000            £’000            £’000            £’000            £’000

Revenue                                    14,760          11,109         19,189           2,177           9,101         56,336

Cost of sales                            (13,435)         (7,745)       (12,084)         (1,280)         (8,086)       (42,630)                                              ————      ————      ————      ————      ————      ————

Gross profit beforeforeign exchange 1,325 3,364 7,105 897 1,015 13,706

Foreign exchange                                                                                                                                576                                                                                                                                                    ————Gross profit 14,282Administration expenses                                                                                                                  (7,120)                                                                                                                                                    ————Operating profit                                                                                                                               7,162Adjusted earnings beforetax, depreciation, amortisation andexceptional items 8,398

Depreciation                                                                                                                                        (943)

Amortisation                                                                                                                                          (51)

Exceptional items                                                                                                                                (242)

Operating profit 7,162Finance income                                                                                                                                        –

Finance costs                                                                                                                                      (374)                                                                                                                                                    ————Profit before taxation 6,788Income tax                                                                                                                                       (1,341)                                                                                                                                                    ————Profit for the period 5,447                                                                                                                                                    ————

138

                                                                     Branded 6 months Sports household ended 30 nutrition consumer September Batteries Lighting Vaping & wellness goods 2019                                                    £’000            £’000            £’000            £’000            £’000            £’000

Revenue                                    14,084         10,465         12,603           2,096              285         39,533

Cost of sales                            (12,682)         (7,270)         (7,298)         (1,222)            (193)       (28,665)                                              ————      ————      ————      ————      ————      ————

Gross profit beforeforeign exchange 1,402 3,195 5,305 874 92 10,868

Foreign exchange                                                                                                                                559                                                                                                                                                    ————Gross profit 11,427Administration expenses                                                                                                                  (5,499)                                                                                                                                                    ————Operating profit 5,928

Adjusted earnings beforetax, depreciation,amortisation andexceptional items 6,955

Depreciation                                                                                                                                        (730)

Amortisation                                                                                                                                             –

Exceptional items                                                                                                                                (297)

Operating profit 5,928Finance income                                                                                                                                        –

Finance costs                                                                                                                                      (410)                                                                                                                                                    ————Profit before taxation 5,518Income tax                                                                                                                                          (981)                                                                                                                                                    ————Profit for the period 4,537                                                                                                                                                    ————

139

Analysis of revenue by geographical destination                                                                                                                                        6 months 6 months ended ended 30 September 30 September 2020 2019                                                                                                                                £’000                 £’000

United Kingdom                                                                                                     51,763               34,660

Rest of Europe                                                                                                         4,008                 4,256

Rest of the World                                                                                                        565                    617                                                                                                                           ————           ————                                                                                                                              56,336               39,533

                                                                                                                           ————           ————The above revenues are all generated from contracts with customers and are recognised at a point in

time. All assets of the Group reside in the UK.

4. Exceptional costs and non-recurring items                                                                                                                                        6 months 6 months ended ended 30 September 30 September 2020 2019                                                                                                                                £’000                 £’000

Transaction related costs                                                                                              40                        –

Refinancing costs                                                                                                         74                        –

Restructuring costs                                                                                                     128                    297                                                                                                                           ————           ————                                                                                                                                   242                    297

                                                                                                                           ————           ————Transaction related costs represent adviser fees for IPO services performed to date.

Refinancing costs  represent  the amortisation of arrangement and associate adviser  fees  incurred  in

obtaining  the HSBC Senior Debt  in FY19 and FY20. Total costs of £744,000 will be amortised over

5 years.

Restructuring costs comprise redundancy costs for 18 employees following the acquisition of LED Hut

in FY19 and wider restructuring within the Group that took place thereafter.

5. Taxation

The income tax expense for the half year ended 30 September 2020 is based upon management’s best

estimate of the weighted average annual tax rate expected for the full year ending 31 March 2021. The

income  tax  expense  is  marginally  higher  than  the  standard  rate  of  19%  predominantly  due  to

disallowable expenses.

6. Earnings per share

Basic earnings per share is calculated by dividing the net income for the year attributable to ordinary

equity  holders after  tax by  the weighted average number of  ordinary  shares outstanding during  the

period.

Diluted  earnings  per  share  is  calculated with  reference  to  the weighted  average  number  of  shares

adjusted for the impact of dilutive instruments in issue. For the purposes of this calculation an estimate

has been made for the share price in order to calculate the number of dilutive share options.

140

The basic and diluted calculations are based on the following:

6 months 6 months ended ended 30 September 30 September 2020 2019                                                                                                                                £’000                 £’000

Profit for the period after tax                                                                                    5,447                 4,537

                                                                                                                   –––––––––––    –––––––––––                                                                                                                                    No.                    No.

Weighted average number of shares for the purposes of

basic earnings per share                                                                           110,005,000      110,005,000

Weighted average dilutive effect of conditional share awards                         1,256,158          1,256,158                                                                                                                   –––––––––––    –––––––––––

Weighted average number of shares for the purposes of

diluted earnings per share                                                                         111,261,158      111,261,158

                                                                                                                   –––––––––––    –––––––––––                                                                                                                                       £                        £

Basic profit per share                                                                                                 0.05                   0.04

Diluted profit per share                                                                                              0.05                   0.04

                                                                                                                   –––––––––––    –––––––––––7. Financial instruments

The  fair  values  of  all  financial  instruments  included  in  the  statement  of  financial  position  are  a

reasonable approximation of their carrying values.

8. Dividends

Dividends of £1,000,000 were declared in the 6 months ended 30 September 2020 (2019: £nil). This

amounted to £0.01 per share (2019: £nil).

9. Post balance date events

Following the year end, Supreme Imports Limited acquired 100% of the share capital of GT Divisions

Limited  for  consideration of  £1,071,000. The book value of  the assets acquired was £121,000. The

company is in the process of performing a detailed PPA exercise including calculation of the fair values

of the assets acquired following which the intangible asset of £950,000 will be allocated amongst the

acquired intangibles, expected to be brand, customer relationships, other intangibles, and goodwill.

On  22  October  2020,  an  accident  took  place  in  the  manufacturing  facility  at  VN  Labs  Limited,  a

subsidiary  of  Supreme  Limited,  that  resulted  in  a  machine  operator  being  injured.  The  Company

immediately contacted the Health & Safety Executive (Britain’s national regulator for workplace health

& safety) who are now undertaking an  investigation. The Company continues  to make all  resources

available to the HSE and will co-operate until the matter is concluded. There is not expected to be any

material financial impact on the Company.

On 28 October 2020 the Company reregistered as a public company, under the name of Supreme plc.

141

PART VII

UNAUDITED PRO FORMA STATEMENT OFNET ASSETS OF THE GROUP

The unaudited pro forma statement of net assets set out below has been prepared by the Directors to

illustrate  the  effect  on  the  Company’s  net  assets  of  the  Placing  proceeds  (‘Proceeds’) and the

repayment of existing debt as if they had taken place on 30 September 2020.

The unaudited pro forma statement of net assets is based on the consolidated statement of financial

position of the Company as at 30 September 2020 and compiled on the basis set out in the notes below.

The unaudited pro forma statement of net assets has been prepared for illustrative purposes only and

illustrates the impact of the Proceeds and the repayment of existing debt as if they had been undertaken

at a hypothetical earlier date. As a result, the hypothetical financial position included in the unaudited

pro forma statement of net assets may differ from the Company’s actual financial position or results.

Prospective investors should read the whole of this Document and not rely solely on the summarised

financial information contained in this Part VII.

Adjustments

The Net Group’s proceeds of consolidated the primary Repayments net assets placing of existing as at receivable bank Pro forma 30 September by the and other consolidated 2020 Company borrowings net assets                                                                                    Note 1               Note 2          Note 3

                                                                                     £’000                 £’000            £’000              £’000

AssetsGoodwill and other intangibles                                     1,852                        –                   –              1,852

Property, plant and equipment                                      3,516                        –                   –              3,516

Right of use asset                                                         1,239                        –                   –              1,239

Investments                                                                          7                        –                   –                     7                                                                              ––––––––          ––––––––    ––––––––      ––––––––Total non-current assets 6,614                        –                   – 6,614                                                                              ––––––––          ––––––––    ––––––––      ––––––––

Current assetsInventories                                                                  19,799                        –                   –            19,799

Trade and other receivables                                       22,445                        –                   –            22,445

Cash and cash equivalents                                          3,494                 5,579          (7,500)            1,573                                                                              ––––––––          ––––––––    ––––––––      ––––––––Total current assets 45,738 5,579 (7,500) 43,817                                                                              ––––––––          ––––––––    ––––––––      ––––––––Total assets 52,352 5,579 (7,500) 50,431                                                                              ––––––––          ––––––––    ––––––––      ––––––––

LiabilitiesCurrent liabilitiesBorrowings                                                                    7,209                        –                   –              7,209

Trade and other payables                                           19,163                        –                   –            19,163

Income tax payable                                                       2,667                        –                   –              2,667                                                                              ––––––––          ––––––––    ––––––––      ––––––––Total current liabilities 29,039 – – 29,039                                                                              ––––––––          ––––––––    ––––––––      ––––––––Net current assets 16,699 5,579 (7,500) 14,778                                                                              ––––––––          ––––––––    ––––––––      ––––––––

142

Adjustments

The Net Group’s proceeds of consolidated the primary Repayments net assets placing of existing as at receivable bank Pro forma 30 September by the and other consolidated 2020 Company borrowings net assets                                                                                    Note 1               Note 2          Note 3

                                                                                     £’000                 £’000            £’000              £’000

Borrowings                                                                  14,563                        –          (7,500)            7,063

Deferred tax liability                                                         183                        –                   –                 183                                                                              ––––––––          ––––––––    ––––––––      ––––––––Total non-current liabilities 14,746 – (7,500) 7,246                                                                              ––––––––          ––––––––    ––––––––      ––––––––Total liabilities 43,785 – (7,500) 36,285                                                                              ––––––––          ––––––––    ––––––––      ––––––––Net assets 8,567 5,579 – 14,146                                                                              ––––––––          ––––––––    ––––––––      ––––––––Explanatory notes to the Pro Forma Statement of Net Assets

1.       The  net  assets  of  the  Company  as  at  30  September  2020  have  been  extracted  without

adjustment from the interim historical financial  information contained in Section B of Part VI of

this document.

2.       The adjustment  represents  the  receipt by  the Company of  the net primary proceeds  from  the

Placing of £5,579,000, which comprises gross proceeds from the primary Placing of £7.5 million

through the issue of new ordinary shares less the fees and expenses of the Placing expected to

be approximately £1,921,000 (net of recoverable VAT). The costs attributable to the issue of new

ordinary  shares will  be  deducted  from  share  premium  and  the  other  costs  attributable  to  the

Admission will be expensed.

3.       This adjustment in this column reflects the repayment of bank loans of £7.5 million.

No account has been taken of trading results, cash movements, or other transactions undertaken by

the Group since 30 September 2020 nor of any other event save as disclosed above.

143

PART VIII

TERMS AND CONDITIONS OF THE PLACING

The terms and conditions set out in this document (the “Terms and Conditions”) do not constitute anoffer or  invitation  to acquire, underwrite or dispose of, or any solicitation of any offer or  invitation  to

acquire, underwrite or dispose of, any Shares or other securities of the Company to any person in any

jurisdiction  to  whom  it  is  unlawful  to  make  such  offer,  invitation  or  solicitation  in  such  jurisdiction.

Persons who seek to participate in the Placing must inform themselves about and observe any such

restrictions and must be persons who are able to lawfully receive this document in their jurisdiction (all

such persons being “Relevant Persons”).

Members of  the public are not eligible  to  take part  in  the Placing. Prospective  investors must  inform

themselves  as  to:  (a)  the  legal  requirements  within  their  own  countries  for  the  purchase,  holding,

transfer, redemption or other disposal of the Shares; (b) any foreign exchange restrictions applicable to

the purchase, holding, transfer, redemption or other disposal of the Shares which they might encounter;

and (c) the income and other tax consequences which may apply in their own countries as a result of

the purchase, holding, transfer, redemption or other disposal of the Shares. This document (including

these Terms and Conditions) does not constitute an offer to sell, or the solicitation of an offer to acquire

or subscribe for, Shares in any jurisdiction where such offer or solicitation is unlawful or would impose

any  unfulfilled  registration,  qualification,  publication  or  approval  requirements  on  the  Company  or

Berenberg.

The Shares have not been, and will not be, registered under the US Securities Act 1933, as amended

(“US Securities Act”), or the securities laws of any State or other jurisdiction of the United States. TheShares may not be offered or sold, directly or indirectly, in or into the United States (except pursuant to

an exemption from, or a transaction not subject to, the registration requirements of the US Securities

Act). No public offering of the Shares is being made in the United States. The Shares are being offered

and sold only outside the United States in “offshore transactions” within the meaning of, and in reliance

on, Regulation S. The Shares have not been approved or disapproved by the United States Securities

and  Exchange  Commission,  any  state  securities  commission  in  the  United  States  or  any  other

regulatory  authority  in  the  United  States,  nor  have  any  of  the  foregoing  authorities  passed  on  or

endorsed  the merits of  the Placing or  the accuracy or adequacy of  the  information contained  in  this

document  (including  these  Terms  and  Conditions). Any  representation  to  the  contrary  is  a  criminal

offence in the United States.

The offer and sale of Shares has not been and will not be registered under the applicable securities

laws of Canada, Australia,  Japan, New Zealand or South Africa. Subject  to  certain exemptions,  the

Shares may not be offered to or sold within Canada, Australia, Japan, South Africa or New Zealand or

to any national, resident or citizen of Canada, Australia, Japan, South Africa or New Zealand.

In the United Kingdom, this document (including these Terms and Conditions) is being distributed to,

and is directed only at “qualified investors” (as defined in the Prospectus Regulation (as defined below))

who are (i) persons having professional experience in matters relating to investments who fall within the

definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000

(Financial  Promotion)  Order  2005,  as  amended  (the  “Order”),  and/or  (ii)  high  net  worth  bodiescorporate, unincorporated associations and partnerships and trustees of high value trusts as described

in Article 49(2)(a)  to  (d) of  the Order, or  (iii) persons  to whom  it  is otherwise  lawful  to distribute  this

document, and  persons within  the United Kingdom who  receive  this  document  (other  than  persons

falling within such description) should not rely on or act upon this document. Any investment activity to

which this document relates is available only to and will be engaged in only with such persons.

In relation to each member state of the European Economic Area (each, a “Relevant Member State”),no Shares have been offered, or will be offered, pursuant to the Placing to the public in that Relevant

Member State prior to the publication of a prospectus in relation to the Shares which has been approved

by  the  competent  authority  in  that  Relevant  Member  State,  all  in  accordance  with  the  Prospectus

Regulation, except  that offers of Shares  to  the public may be made at any  time under  the  following

exemptions under the Prospectus Regulation:

A.       to any legal entity which is a “qualified investor” (as defined in the Prospectus Regulation);

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B.       to  fewer  than 150, natural or  legal persons  (other  than  “qualified  investors”)  in such Relevant

Member State; or

C.       in any other circumstances falling within Article 4(2) of the Prospectus Regulation,

provided that no such offer of Shares shall result in a requirement for the publication of a prospectus

pursuant  to  Article  3  of  the  Prospectus  Regulation  or  any  measure  implementing  the  Prospectus

Regulation in a Relevant Member State and each person who initially acquires any Shares or to whom

any offer is made under the Placing will be deemed to have represented, acknowledged and agreed

that it is a “qualified investor” within the meaning of Article 2(e) of the Prospectus Regulation. For the

purposes of this provision, the expression “an offer to the public” in relation to any offer of Shares in any

Relevant Member State means a communication in any form and by any means presenting sufficient

information on the terms of the offer and any Shares to be offered so as to enable an investor to decide

to purchase or subscribe for the Shares, as the same may be varied in that Relevant Member State by

any  measure  implementing  the  Prospectus  Regulation  In  that  Relevant  Member  State  and  the

expression  the  “Prospectus Regulation”  means  Regulation  (EU)  2017/1129  (as  amended),  to  theextent implemented in the Relevant Member State and includes any relevant Implementing measure in

each Relevant Member State.

These Terms and Conditions apply to persons who are invited to and who choose to purchase Placing

Shares in the Placing (each a “Placee”). Each Placee hereby agrees with Berenberg to be legally andirrevocably bound by these Terms and Conditions which will be the Terms and Conditions on which the

Placing Shares will be acquired in the Placing.

Acceptance  of  any  offer  incorporating  the  Terms  and  Conditions  (whether  orally  or in  writing  or

evidenced by way of a contract note) will  constitute a binding  irrevocable commitment by a Placee,

subject  to  the Terms and Conditions set out below,  to subscribe and pay  for  the  relevant number of

Placing  Shares  (the  “Placing Participation”).  Such  commitment  is  not  capable  of  termination  orrescission by the Placees in any circumstances except fraud. All such obligations are entered into by

the  Placees with  Berenberg in  its  capacity  as  agent  for  the  Company  and  are  therefore  directly

enforceable by the Company.

In the event that Berenberg has procured acceptances from Placees in connection with the Placing prior

to the date of the despatch of this document to a Placee, Berenberg will, prior to Admission, request

confirmation from any such Placee that its Placing Participation as agreed in any earlier commitment

remains firm and binding upon the Terms and Conditions of this document and referable to the contents

of this document of which these Terms and Conditions form part. Upon such confirmation being given

(whether orally, in writing or by conduct (including, without limitation, by receipt of the relevant placing

proceeds  by  Berenberg))  any  agreement  made  in  respect  of  the  Placing  Shares  shall  be  varied,

amended and/or ratified in accordance with the Terms and Conditions and based upon this document

and no reliance may be placed by a Placee on any earlier version of this document.

Terms of the Placing

Application has been made to the London Stock Exchange for the admission of the Placing Shares to

trading on AIM. Except as otherwise set forth herein, it is anticipated that dealings in the Placing Shares

will  commence  on  AIM  at  8.00  a.m.  on 1  February 2021 for  normal  account  settlement  and  that

Admission will become effective on that date. The Placing Shares will not be admitted to trading on any

stock exchange other than AIM. Each Placee will be deemed to have read these Terms and Conditions

in  their  entirety.  Berenberg  is  acting  for  the Company  only  and  no  one  else  in  connection with  the

Placing and will not regard any other person (whether or not a recipient of these Terms and Conditions)

as a client in relation to the Placing and to the fullest extent permitted by law and applicable FCA rules,

neither Berenberg nor any of its affiliates will have any liability to Placees or to any person other than

the Company in respect of the Placing.

The  Placing  Shares  will  rank  equally  in  all  respects  with  the  existing  Shares  of  the  Company  on

Admission, including the right to receive dividends or other distributions declared on or after Admission,

if any.

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Conditions

Your Placing Participation is in all respects conditional upon:

(i)       the Placing Agreement becoming unconditional in all respects and not having been terminated in

accordance with its terms; and

(ii)      Admission having become effective,

in each case by 1 February 2021 or such later time and/or date as the Company, Grant Thornton and

Berenberg agree, but in any event being no later than 26 February 2021.

Pursuant to the Placing Agreement, Berenberg has agreed, on behalf of and as agent for the Company

and the Selling Shareholders, to use its reasonable endeavours to procure subscribers or purchasers

for the Placing Shares at the Placing Price, subject to these Terms and Conditions. The Placing is not

being underwritten.

The Placing Agreement contains certain warranties and undertakings from the Company, the Directors

and the Selling Shareholders and certain indemnities from the Company, in each case for the benefit

of Grant Thornton and Berenberg. Grant Thornton and/or Berenberg may, in their absolute discretion,

terminate the Placing Agreement if prior to Admission, inter alia, a force majeure event occurs, there is

a breach of any of  the undertakings or any  fact or circumstance arises which causes a warranty  to

become untrue or inaccurate in any respect. The exercise by Grant Thornton and/or Berenberg of any

right of termination or any right of waiver exercisable by Grant Thornton and/or Berenberg contained in

the  Placing  Agreement  or  under  the  Terms  and  Conditions  set  out  herein  is  within  the  absolute

discretion of Grant Thornton and/or Berenberg (as the case may be) and neither Grant Thornton nor

Berenberg will have any liability to you whatsoever in connection with any decision to exercise, or not

exercise, any such rights.

If  (i) any of  the conditions  in  the Placing Agreement are not satisfied (or, where relevant, waived) or

(ii) the  Placing Agreement  is  terminated  or  (iii)  the  Placing Agreement  does  not  otherwise  become

unconditional in all respects, the Placing will not proceed and all funds delivered by you to Berenberg

will  be  returned  to you at  your  risk without  interest, and your  rights and obligations hereunder shall

cease and determine at such time and no claim shall be made by you in respect thereof.

None of the Company, the Directors, the Selling Shareholders, Grant Thornton or Berenberg owes any

fiduciary duty to any Placee in respect of the representations, warranties, undertakings or indemnities

in the Placing Agreement.

Settlement

The Company has applied for the Shares to be held in CREST and settlement of the Placing Shares

will take place in CREST.

Placing Shares will be delivered direct into your CREST account, provided payment has been made in

terms satisfactory to Berenberg and the details provided by you have provided sufficient information to

allow the CREST system to match to the CREST account specified. Placing Shares comprised in your

Placing  Participation  are  expected  to  be  delivered  to  the  CREST  account  which  you  specify  by

telephone to your usual sales contact at Berenberg.

If you do not provide any CREST details or if you provide insufficient CREST details to match within the

CREST system  to  your details, Berenberg may at  its discretion deliver  your Placing Participation  in

certificated form provided payment has been made in terms satisfactory to Berenberg and all conditions

in relation to the Placing have been satisfied or waived.

Subject to the conditions set out above, payment in respect of your Placing Participation Is due as set

out below. You should provide your settlement details in order to enable instructions to be successfully

matched in CREST. The relevant settlement details are as follows:

CREST participant ID of Berenberg: 5KQAQ

Expected Trade date:                                                                                                      27 January 2021

Settlement date:                                                                                                              1 February 2021

ISIN code for the Placing Shares: GB00BDT89C08

Deadline for you to input instructions into CREST: 12.00 p.m. (UK time) on 29 January 2021

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In the event that the Placing Agreement does not become unconditional in all respects or is terminated,

the Placing will not proceed. Once the Placing Shares are allotted and issued, such Placing Shares will

be admitted to CREST with effect from Admission. It  is expected that dealings on AIM in the Placing

Shares will commence at 8.00 a.m. on 1 February 2021.

Further Terms, Confirmations and Warranties

In  accepting  the  Placing  Participation,  you  make  the  following  confirmations,  acknowledgements,

warranties and/or undertakings to Grant Thornton, Berenberg and the Company and their respective

directors/agents and advisers:

1.       You represent and warrant that you have read these Terms and Conditions in their entirety and

acknowledge  that  your  participation  in  the Placing will  be  governed  by  the  terms,  conditions,

representations, warranties, acknowledgements, agreements and undertakings of  these Terms

and Conditions.

2.       You acknowledge and agree that your acceptance of your Placing Participation on the terms, set

out  in this document and these Terms and Conditions is  legally binding,  irrevocable and is not

capable of termination or rescission by you in any circumstances.

3.       You confirm, represent and warrant that you have not relied on, received nor requested, nor do

you have any need to receive, any prospectus, offering memorandum, listing particulars or any

other document other than this document, describing the business and affairs of the Company

which has been prepared for delivery to prospective Investors in order to assist them in making

an  investment  decision  in  respect  of  the  Placing  Shares.  You  further  confirm,  represent  and

warrant  that  you  are  not  relying  on  any  information  given  or  any  representations, warranties,

agreements or undertakings (express or implied), written or oral, or statements made at any time

by the Company, Grant Thornton or Berenberg or by any subsidiary, holding company, branch or

associate  of  the  Company,  Grant  Thornton  or  Berenberg,  or  any  of  their  respective  officers,

directors,  agents,  employees  or  advisers,  or  any  other  person  in  connection with  the Placing

other than information contained in this document and neither Grant Thornton, Berenberg nor the

Company or any of their respective directors and/or employees and/or person(s) acting on behalf

of any of them shall, to the maximum extent permitted under law, have any liability (except in the

case  of  fraud)  in  respect  of  any  such  other  information,  representation, warranty,  agreement,

undertaking or statement. You irrevocably and unconditionally waive any right you may have in

respect  of  such  other  information,  representation,  warranty,  agreement,  undertaking  or

statement. You further confirm, represent and warrant that in making your application under the

Placing you will be relying solely on the information contained in this document and these Terms

and  Conditions  and  that  you  have  reviewed  this  document,  including  (without  limitation)  the

discussion of the conditions of the Placing Agreement, commission payable to Berenberg, and

the Risk Factors related to the Company, its operations and the Shares.

4.       You acknowledge and agree that the content of this document is exclusively the responsibility of

the Company and its directors and neither Grant Thornton, Berenberg, nor any of their respective

directors and/or employees or any person acting on their behalf shall have any liability for any

information,  representation  or  statement  contained  in  this  document  or  for  any  information

published by or on behalf of the Company or for any decision by you to participate in the Placing

based on any information, representation or statement contained in this document or otherwise.

5.       You confirm, represent and warrant that you are sufficiently knowledgeable to understand and be

aware of the risks associated with, and other characteristics of, the Placing Shares and, among

others, of the fact that you may not be able to resell the Placing Shares except in accordance

with certain limited exemptions under applicable securities legislation and regulatory instruments.

6.       You confirm, represent and warrant, if a body corporate, that you are a valid and subsisting body

corporate  and  have  all  the  necessary  corporate  capacity  and  authority  to  execute  your

obligations in connection with your Placing Participation.

7.       You agree that the exercise by Grant Thornton and Berenberg of any right of termination or any

right of waiver exercisable by Grant Thornton and Berenberg contained in the Placing Agreement

or the exercise of any discretion thereunder is within the absolute discretion of Grant Thornton

and  Berenberg  and  neither  Grant  Thornton  nor  Berenberg  will  have  any  liability  to  you

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whatsoever  in  connection with  any  decision  to  exercise  or  not  exercise  any  such  rights. You

acknowledge that if (i) any of the conditions in the Placing Agreement are not satisfied (or, where

relevant, waived) or (ii) the Placing Agreement is terminated or (iii) the Placing Agreement does

not otherwise become unconditional  in all  respects  the Placing will  lapse and your  rights and

obligations hereunder shall cease and determine at such time and no claim shall be made by you

in respect thereof.

8.       You acknowledge and agree that Grant Thornton and Berenberg are not acting for, and that you

do not expect Grant Thornton or Berenberg to have any duties or responsibilities towards, you

for  providing  protections  afforded  to  their  customers  or  clients  under  the  Financial  Conduct

Authority  Conduct  of  Business  Source  Book  or  advising  you  with  regard  to  your  Placing

Participation and  that  you are not,  and will  not  be,  a  customer or  client  of Grant Thornton or

Berenberg  as  defined  by  the Financial Conduct Authority Conduct  of Business Source Book.

Likewise, Grant Thornton and Berenberg will not  treat any payment by you pursuant  to  these

Terms and Conditions as client money governed by the Financial Conduct Authority Conduct of

Business Source Book.

9.       You confirm, represent and warrant that you may lawfully acquire the Placing Shares comprising

your Placing Participation and  that you have complied with and will comply with all applicable

provisions of FSMA with respect to anything done by you in relation to the Placing Shares in, from

or otherwise involving, the United Kingdom.

10.     You  acknowledge  and  agree  that  your  agreement  with  Berenberg  to  acquire  Placing  Shares

comprising  your Placing Participation, whether  by  telephone  or  otherwise  is  a  legally  binding

contract entered into on the basis of and incorporating these Terms and Conditions and that any

non-contractual obligation arising  therefrom will be governed by and construed  in accordance

with, the laws of England and Wales to the exclusive jurisdiction of whose courts you irrevocably

submit.

11.      You acknowledge and agree that time shall be of the essence as regards obligations pursuant to

these Terms and Conditions.

12.     You  acknowledge  and  agree  that  it  is  the  responsibility  of  any  person  outside  of  the  United

Kingdom wishing to subscribe for or purchase Placing Shares to satisfy himself that, in doing so,

he  complies  with  the  laws  of  any  relevant  territory  in  connection  with  such  subscription  or

purchase and that he obtains any requisite governmental or other consents and observes any

other applicable formalities.

13.     You acknowledge and agree that the Placing Shares have not been and will not be registered

under the laws, or with any securities regulatory authority, of any province of Canada, Australia,

Japan, South Africa or New Zealand and, subject to limited exceptions, the Placing Shares may

not be offered, sold, transferred or delivered, directly or indirectly into any province of Canada,

Japan, Australia, South Africa or New Zealand or their respective territories and possessions.

14.     You warrant that you have complied with all relevant laws of all relevant territories, obtained all

requisite governmental or other consents which may be required in connection with your Placing

Participation, complied with all  requisite  formalities and  that you have not  taken any action or

omitted to take any action which will or may result in Grant Thornton, Berenberg, the Company

or any of  their  respective directors, officers, agents, employees, affiliates or advisers acting  in

breach of the legal or regulatory requirements of any territory in connection with the Placing or

your application.

15.     You warrant that your acquisition of Placing Shares does not trigger, in the jurisdiction in which

you are resident or located: (i) any obligation to prepare or file a prospectus or similar document

or any other report with respect to such purchase; (ii) any disclosure or reporting obligation of the

Company; or (iii) any registration or other obligation on the part of the Company.

16.     You are  acting  as  principal  and  for  no  other  person and  that  your  acceptance of  the Placing

Participation  will  not  give  any  other  person  a  contractual  right  to  require  the  issue  by  the

Company of any Placing Shares.

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17.     You warrant that in accepting your Placing Participation you are not applying for registration as,

or as a nominee or agent for, a person who is or may be a person mentioned in sections 67 to

72 inclusive and sections 93 to 97 inclusive of the Finance Act 1986.

18.     You confirm that, to the extent applicable to you, you are aware of your obligations in connection

with  the Criminal  Justice Act  1993,  the Terrorism Act  2006,  the UK Anti-Terrorism Crime  and

Security Act 2001, the Money Laundering, Terrorist Financing and Transfer of Funds (Information

on  the Payer) Regulations 2017 (“Money Laundering Regulations 2017”) and  the Proceeds of

Crime Act  2002  and  the  Financial  Services  and  Markets Act  2000  (as  amended),  you  have

identified your clients in accordance with the Money Laundering Regulations 2017 and you have

complied fully with your obligations pursuant to those Regulations.

19.     You  acknowledge  and  agree  that  all  times  and  dates  in  this  document  and  these Terms  and

Conditions  may  be  subject  to  amendment  and  Berenberg  shall  notify  you  of  any  such

amendments.

20.     You acknowledge and agree that your agreement with Berenberg to acquire Placing Shares shall

be enforceable under the Contracts (Rights of Third Parties) Act 1999 by any of the Company or

any affiliate of Berenberg.

21.     You acknowledge that any of your monies held or received by Berenberg will not be subject to

the protections conferred by the FCA’s Client Money Rules.

22.     You acknowledge and agree that the Placing Shares have not been and will not be registered

under  the  US  Securities Act  or  with  any  securities  regulatory  authority  of  any  state  or  other

jurisdiction of the United States, and are being offered and sold only outside the United States in

“offshore transactions” (as defined in Regulation S), Accordingly, the Placing Shares may not be

offered, sold,  transferred or delivered directly or  indirectly  In or  into  the United States, except

pursuant to an effective registration statement under the US Securities Act or an exemption from

the registration requirements of the US Securities Act, and, in connection with any such transfer,

the Company will have the right to obtain, as a condition to transfer, a legal opinion of counsel,

in form and by counsel reasonably satisfactory to the Company, that no such US Securities Act

registration  is  or  will  be  required  along with  appropriate  certifications  by  the  transferee  as  to

appropriate matters. No representation has been made as to  the availability of any exemption

under the US Securities Act for the reoffer, resale, transfer or delivery of the Placing Shares.

23.     You  represent  and warrant  that  you  have  not  distributed,  forwarded,  transferred  or  otherwise

transmitted this document or any other presentation or offering materials concerning the Placing

Shares within the United States, nor will you do any of the foregoing. You understand that the

information in this document, including financial information, may be materially different from any

disclosure that would be provided in a registered offering in the United States.

24.     You agree, represent and warrant as follows:

24.1   You are acquiring the Placing Shares outside the United States in an “offshore transaction”

(as defined in Regulation S);

24.2   You will not offer or sell the Placing Shares in the United States absent registration or an

exemption from registration under the US Securities Act;

24.3   You are not acquiring the Placing Shares as a result of any form of directed selling efforts

(as defined In Rule 902 under the US Securities Act); and

24.4   if you are in the United Kingdom, you are a person falling within the exemption contained

in Section 86(1)(a) of the Financial Services and Markets Act 2000 (as amended) or falling

within  one  or  more  of  the  categories  of  persons  set  out  in  Article  19  (Investment

Professionals) or Article 49 (High net worth companies, unincorporated associations etc.)

of the FPO.

149

25.     In making an investment decision with respect to the Placing Shares, for yourself and on behalf

of  any  person  for  whose  account  you  are  acquiring  the  Placing  Shares,  you  represent  and

warrant that you have:

25.1   not  relied  on  any  representation,  warranty  or  statement made  by  the  Company,  Grant

Thornton or Berenberg or any of their respective directors, employees, advisers, agents or

affiliates;

25.2   the ability to bear the economic risk of your investment in the Placing Shares and have no

need for liquidity with respect to your investment in the Placing Shares;

25.3   such knowledge and experience in financial and business matters that you are capable of

evaluating the merits, risks and suitability of investing in the Placing Shares, and are able

to sustain a complete loss of any investment in the Placing Shares; and

25.4   investigated  independently  and  made  your  own  assessment  and  satisfied  yourself

concerning the relevant tax, legal, currency and other economic considerations relevant to

your  Investment  in  the  Placing  Shares,  including  any  federal,  state  and  local  tax

consequences,  affecting  you  in  connection  with  your  purchase  and  any  subsequent

disposal of the Placing Shares.

26.     You acknowledge that from the point at which a request for admission to trading on AIM is made

by the Company, the Company and its financial instruments will be subject to the provisions of

MAR  and  that  you will  observe  the  provisions  of MAR  in  relation  to  the Company’s  financial

instruments, including in relation to the control of any inside information.

You acknowledge that the Company, Grant Thornton, Berenberg, any transfer agent, any distributors or

dealers and  their  respective affiliates and others will  rely on  the  truth and accuracy of  the  foregoing

warranties,  acknowledgements,  representations,  undertakings  and  agreements,  and  you  agree  to

indemnify  and  hold  harmless  the Company, Grant Thornton, Berenberg  and  any  of  their  respective

officers, directors, agents, employees or advisers (the “Indemnified Persons”) from and against anyand  all  costs,  claims  losses,  damages,  liabilities  or  expenses,  Including  legal  fees  and  expenses

(including any VAT thereon), which an Indemnified Person may incur by reason of, or in connection with,

any  representation, warranty,  acknowledgement,  agreement  or  undertaking made herein  not  having

been true when made, any breach thereof or any misrepresentation.

The  rights  and  remedies  of  Grant  Thornton,  Berenberg  and  the  Company  under  these  Terms  and

Conditions are in addition to any rights and remedies which would otherwise be available to them and

the exercise or partial exercise of one will not prevent the exercise of others.

You agree to be bound by the articles of association of the Company (as amended from time to time)

once the Placing Shares which you have agreed to subscribe or purchase pursuant to the Placing have

been acquired by you.

Grant  Thornton,  Berenberg  and  the  Company  expressly  reserve  the  right  to  modify  the  Placing

(including, without limitation, its timetable and settlement) at any time before Admission.

You  further agree  that  these Terms and Conditions shall survive after completion of  the Placing and

Admission.

150

PART IX

ADDITIONAL INFORMATION

1. Responsibility

The Company and the Directors, whose names and functions are set out  in Part  I of  this document,accept responsibility individually and collectively for the information contained in this document. To thebest of the knowledge and belief of the Company and the Directors (who have taken all reasonable careto ensure that such is the case), the information contained in this document is in accordance with thefacts and does not omit anything likely to affect the import of such information.

2. Incorporation and general

(a)      The Company was  incorporated  in England  and Wales  on  13  June  2006  under  the  name ofSupreme Limited with  registered number 05844527 as a private company with  limited  liabilityunder  the  Companies  Act  1985.  The  Company  was  re-registered  as  a  public  company  on28 October 2020 under  the name Supreme plc.  Its  registered office and  its principal place ofbusiness  is  currently  and  will,  following  Admission,  be  at  4  Beacon  Road,  Ashburton  Park,Trafford Park, Manchester, England, M17 1AF. It is domiciled in England and Wales.

(b)      The Company is a public limited company and, accordingly, the liability of its members is limited.

(c)      The principal legislation under which the Company was formed and operates is the CompaniesAct.

(d)      The Company currently has thirteen subsidiary undertakings (all of which, save for SI Holdingsand SI Jersey Limited (which were  incorporated  in Jersey) and Holding Esser Affairs B.V. andAGP Trading B.V. (which were incorporated in the Netherlands), are incorporated in England andWales)  of  which  only Supreme Imports  Limited,  GT  Divisions  Limited,  Provider  DistributionLimited, and VN Labs Limited are significant subsidiary undertakings, being considered by theCompany to be likely to have a significant effect on the assessment of the assets and liabilities,financial position and/or profits and losses of the Group:

Company Principal Issued share Ownership/Name number Activity capital (fully paid) Voting rights

%

05292196

04142662

04642418

VN Labs Limited 08792922

05415000

OperatingCompany

£10.00 divided into 10 ordinary shares of£1.00 each

The Company(100%)

Provider DistributionLimited

OperatingCompany

£100 divided into 45 Aordinary shares of £1.00each, 45 B ordinary sharesof £1.00 each,5 C ordinary shares of£1.00 each, and 5 Dordinary shares of £1.00each

The Company(100%)

Supreme ImportsLimited (100%)

£200.00 divided into 200 ordinary shares of£1.00 each

DormantCompany

£1.00 divided into 1 ordinary share of £1.00

OperatingCompany

Supreme ImportsLimited (100%)

Battery ForceLimited

Supreme ImportsLimited (100%)

£100.00 divided into 100 ordinary shares of£1.00

HoldingCompany

PowerQuickLimited 

Supreme ImportsLimited

151

Company Principal Issued share Ownership/Name number Activity capital (fully paid) Voting rights

%

10180318

09444762

(e)      In addition to the subsidiary undertakings referred to above the Company has a minority interestin Elena Dolce Limited.

3. Share capital

(a)      On incorporation, the issued share capital of the Company consisted of 1 ordinary share (whichwas the subscriber share) with a nominal value of £1.00. On 12 December 2017 the Companyallotted and issued 999 ordinary shares of £1.00 each to Sandy Chadha for cash at par.

(b)      On 8 March 2018 the Company subdivided each of the 1,000 issued ordinary shares of £1.00each into 5 ordinary shares of £0.20 each and issued 110,000,000 ordinary shares of £0.20 eachfully paid in the capital of the Company to Sandy Chadha as consideration for the acquisition ofthe issued share capital of SI Holdings referred to in paragraph 8(e) of Part IX of this document.

(c)      On  27 March  2018  the Company  resolved  that  the  issued  share  capital  of  the  Company  bereduced from £22,001,000 to £11,000,500 by cancelling and extinguishing capital to the extentof £0.10 on each issued fully paid up ordinary share of £0.20 each in the Company and reducingthe nominal value of each issued fully paid up ordinary share from £0.20 to £0.10 and the amountby which the share capital is so reduced be credited to a reserve. The reduction was registeredat Companies House on 11 April 2018.

(d)      On 14 September 2018 the Company granted Options to employees over a total of 2,174,120Shares at an exercise price of £0.3837 per share under the EMI Scheme. On 4 January 2021 theCompany granted Options  to one employee over 594,914 Shares at  the same exercise priceunder an individual unapproved option agreement pursuant to a longstanding commitment. Since14 September 2018 Options over 187,704 Shares under the EMI Scheme have lapsed by reasonof the relevant employees ceasing to be employed within the Group and accordingly Options overa total of 1,986,416 Shares remain outstanding and capable of exercise under the EMI Scheme

DormantCompany

£1.00 divided into 1 ordinary share of £1.00

PowerquickLimited (100%)

Sub OHMJuice Limited

HoldingCompany

£102.00 divided into 100 ordinary shares of£1.00, 1 Ordinary A shareof £1.00 and 1 Ordinary B share of£1.00

PowerquickLimited (100%)

Holding EsserAffairs B.V.

HoldingCompany

EUR 18,000.00 Supreme 88Limited (100%)

13040585(Netherlands)

Supreme 88Limited

AGP TradingB.V.

13010955(Netherlands)

OperatingCompany

EUR 22,689.00 Holding EsserAffairs B.V.(100%)

SI Holdings(Jersey) Limited

121655(Jersey)

HoldingCompany

£170.00 divided into 170 ordinary shares of£1.00

The Company(100%)

SI JerseyLimited

117977(Jersey)

DormantCompany

£100.00 divided into 100 ordinary shares of£1.00

SI Holdings(Jersey) Limited(100%)

Supreme NomineesLimited

13012883 Holding ofshares asNominee

£1.00 divided into 1 ordinary share of £1.00

The Company(100%)

GT DivisionsLimited

07341040 OperatingCompany

£100.00 divided into 100 ordinary shares of£1.00

SupremeImports Limited(100%)

152

and a total of 594,914 Shares remain outstanding and capable of exercise under the unapprovedagreement.

(e)      On 7 January 2019  the Company  resolved  that 82,503,750 ordinary shares of £0.10 each beredesignated as A ordinary shares of £0.10 each and 27,501,250 ordinary shares of £0.10 beredesignated as B ordinary shares of £0.10 each.

(f)       On 2 September 2020 the Company resolved that the existing A ordinary shares of £0.10 eachand B ordinary shares of £0.10 each be redesignated as ordinary shares of £0.10 each.

(g)      The Company has  invited each holder of  the outstanding Options referred  to  in paragraph (d)above to exercise up to 35 per cent. of the Options held by him conditional on Admission. As aresult of the acceptances of those invitations a total of 897,965 Employee Shares will be issuedto  Supreme  Nominees  Limited  and  sold  pursuant  to  the  Placing  on  behalf  of  the  relevantemployees.

(h)      Following the issue of the Employee Shares, Options over a total of 1,683,365 Shares will remainoutstanding  and  capable  of  exercise  (namely 1,296,670 Shares  under  the  EMI  Scheme  and386,695 Shares) under the unapproved agreement referred to in paragraph 3(d)).

(i)       Save  for  the  issue  of  the  New  Shares and  the  Employee  Shares and  save  as  disclosed  inparagraph 3(d) and 3(h) above:

i.         no share or loan capital of the Company or any of its subsidiaries is under option or agreedconditionally or unconditionally to be put under option; and

ii.        there are no acquisition rights and or obligations over authorised but unissued capital oran undertaking to increase the authorised capital;

(j)       Pursuant to resolutions passed by the Company on 26 January 2021, the Board has authority to:

i.         allot 5,597,015 shares in the Company or to grant rights to subscribe for or to convert anysecurity  into  shares  in  the  Company  or  grant  rights  to  subscribe  for  or  convert  anysecurities  into  shares  in  connection with  the  Placing,  and  otherwise  up  to  a maximumaggregate  nominal value of  £3,833,330 (representing  approximately one  third  of theEnlarged Share Capital) provided that this authority shall expire at the conclusion of thenext subsequent annual general meeting of the Company or, if earlier, 15 months from thedate of the passing of the resolution unless previously renewed, varied or revoked by theCompany in general meeting and ,in the case of the Placing authority, 28 February 2021;and

ii.        allot  equity  securities  for  cash pursuant  to  the  authority  of  the  Board  conferred  byparagraph  3(j)(i) as  if  section  561(1)  of  the  Companies Act  did  not  apply  to  any  suchallotment in connection with the Placing, a rights issue of Shares (in proportion (as nearlyas may be practicable)  to  their  respective holdings of  such shares, but  subject  to suchexclusions or other arrangements as the Directors may deem necessary or expedient inrelation to fractional entitlements or any legal or practical problems under the laws of anyterritory, or the requirements of any regulatory body or stock exchange) and otherwise upto an aggregate nominal value of £1,165,000 (representing approximately ten per cent. ofthe Enlarged Share Capital) provided that this authority shall expire at the conclusion ofthe next annual general meeting of the Company or, if earlier, 15 months from the date ofthe  passing  of  the  resolution  unless  previously  renewed,  varied  or  revoked  by  theCompany in general meeting.

(k)      Following the Placing, the Directors will be authorised to allot Shares up to an aggregate nominalamount of £3,833,330, pursuant to the authority referred to in paragraph 3(j)(i) above.

(l)       Save for  the allotments of  the shares referred to at paragraphs 3(a)  to 3(b)  inclusive and 3(g)above,  since  incorporation  no  capital  of  the  Company  has  been  allotted  for  cash  or  for  aconsideration other  than cash. The Shares  issued pursuant  to paragraph 3(b)  in exchange fornon-cash assets constituted more than 10 per cent. of the issued share capital of the Company.

153

(m)     The Shares will, on Admission, rank pari passu in all respects and will rank in full for all dividendsand other  distributions  thereafter  declared, made or  paid on  the ordinary  share  capital  of  theCompany. The Shares are freely transferable in accordance with the Articles of Association, moredetails of which are in paragraph 4 of this Part IX.

(n)      The Shares  are  in  registered  form and will,  following Admission,  be capable  of  being  held  inuncertificated  form. Application  has  been made  to  Euroclear,  the  operator  of  CREST, for  theShares  to  be  enabled  for  dealing  through CREST  as  a  participating  security with  effect  fromAdmission. None of the Shares are being marketed or made available in whole or in part to thepublic in conjunction with the application for Admission other than pursuant to the Placing. TheNew Shares are being issued at a price of 134 pence per share, representing a premium of 124pence over the nominal value of £0.10 each. The expected issue date of the New Shares andEmployee Shares is 1 February 2021.

(o)      The provisions of  section 561 of  the Companies Act  (to  the extent not disapplied pursuant  tosection 570 of the Companies Act) confer on Shareholders rights of pre-emption in respect of theallotment of equity securities and sales of equity securities held in treasury which are or are tobe  paid  in  cash,  and  apply  to  the  unissued  share  capital  of  the  Company  to  the  extent  notdisapplied  as  described  in  paragraph  3(j)(ii).  Subject  to  certain  limited  exceptions,  and  savepursuant  to  any  disapplication  which  is  for  the  time  being  in  effect,  unless  the  approval  ofShareholders in a general meeting is obtained, the Company must normally offer Shares to beissued for cash to the holders of existing Shares on a pro rata basis.

(p)      The  currency  of  the  Shares  is  Pounds  Sterling. The  Shares  have  been  created  under  theCompanies Act.

(q)      Neither  the Company nor any member of  the Group has any shares not  representing capital;there are no shares in the Company held by or on behalf of the Company itself or by subsidiariesof the Company; and there are no convertible securities, exchangeable securities or securitieswith warrants.

(r)       No shares of  the Company are  currently  in  issue with a  fixed date on which entitlement  to adividend  arises  or  a  time  limit  after  which  entitlement  to  dividend  lapses  and  there  are  noarrangements in force whereby future dividends are waived or agreed to be waived.

(s)      The net asset value of an ordinary share but prior to the issue of New Shares and the EmployeeShares,  based  on  the  consolidated  net  assets  of  the  Company  and  its  subsidiaries  as  at31 March 2020  is 3.69 pence  (“Net Asset Value Per Share”). The Placing Price of 134 pencerepresents a premium of 130.31 pence over the Net Asset Value per Share.

(t)       The issued fully paid up share capital of the Company as at the date of this document and as itis expected to be immediately following Admission is as follows:

Issued share Number of capital Ordinary £ Shares

As at the date of this document                                                            11,000,500      110,005,000Immediately following Admission                                                          11,649,998      116,499,980

4. Articles of Association and Objects

The Articles of Association of the Company contain, inter alia, provisions to the following effect:

(a)      Voting rights

Subject to any rights or restrictions attached to the shares (including as a result of unpaid calls)and/or  as mentioned  below,  on  a  show  of  hands  every member who  (being  an  individual)  ispresent  in  person  or  by  proxy  or  (being  a  corporation)  is  present  by  a  duly  authorisedrepresentative and is entitled to have a vote shall upon a show of hands have one vote and ona poll every member who is present in person or by proxy and entitled to vote shall have one votefor every share of which he is the holder. Where, in respect of any shares, any registered holderor any other person appearing  to be  interested  in such shares  fails  to comply with any notice

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given by the Company under section 793 of the Companies Act, in the time period specified inthe notice, the shares in question may be disenfranchised.

(b)      General Meetings

An annual general meeting shall be held once a year in accordance with the Companies Act.

Subject  to  a member’s  right  to  requisition  a  general  meeting  pursuant  to  section  303  of  theCompanies Act, general meetings of the Company are convened at the discretion of the Board,and with the exception of the annual general meeting, all such general meetings of the Companyshall be called general meetings.

An annual general meeting shall be called by at least 21 clear days’ notice in writing. All generalmeetings shall be called by at least 14 clear days’ notice to the Company regardless of the typeof resolution being passed (under section 307(1) of the Companies Act). A notice must be servedon a member in accordance with the provisions of the Companies Act, that is, in hard copy form,or where the member has consented or is deemed to have consented under the Companies Act,in electronic form or via a website. If the notice contains an electronic address for the Company,a member may send any Document or information relating to the relevant general meeting to thatelectronic address. Notice shall be given to all members and the Directors and the auditors.

The notice shall be exclusive of the day on which it is served or deemed to be served and of theday for which it is given and shall specify the place, day and hour of the meeting. A notice callingan annual general meeting shall specify the meeting as such and the notice convening a meetingto pass a special resolution shall specify the intention to propose the resolution as such. Everynotice must include a reasonably prominent statement that a member entitled to attend and voteis entitled to appoint a proxy or proxies to attend and, on a poll, vote instead of him and that aproxy need not be a member of the Company.

A general meeting may be called by shorter notice being less than 14 days with the consent ofmembers who (i) are a majority in number and (ii) hold 95 per cent., in nominal value of the votingshares of the company.

The quorum required for a general meeting is two members present in person or by proxy andentitled to attend and to vote on the business to be transacted.

(c)      Alteration of capital

In accordance with the Companies Act the Company may by ordinary resolution consolidate anddivide its shares, or any of them, into shares of a larger amount. The Company may by ordinaryresolution divide all or any of its share capital into shares of a larger amount or sub-divide all orany of its shares into shares of a smaller amount.

The Company may, from time to time, by special resolution reduce its share capital, any capitalredemption  reserve and any share premium account  in any manner authorised, and with andsubject to any incident prescribed or allowed by the Companies Act and the rights attached toexisting  shares.  Subject  to  and  in  accordance with  the  provisions  of  the Companies Act,  theCompany may purchase its own shares (including redeemable shares).

(d)      Variation of rights

Subject  to  the Companies Act  and  every  other  statute  for  the  time being  in  force  concerningcompanies and affecting the Company (the “Statutes”), if at any time the capital of the Companyis divided into different classes of shares, all or any of the rights and privileges attached to anyclass of share may be varied or abrogated either:

(i)       in such a manner (if any) as may be provided by the rights attaching to such class; or

(ii)      in the absence of any such provision, with the consent in writing of the holders of at least75 per cent. of the nominal amount of the issued shares of the relevant class or with thesanction of a special resolution passed at a separate meeting of the holders of the sharesof the relevant class. At any such separate meeting the holders present  in person or byproxy of one third of the issued shares of the class in question shall be a quorum.

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The creation or issue of shares ranking pari passu with or subsequent to the shares of any classshall not (unless otherwise expressly provided by the Articles or the rights attached to such last-mentioned  shares  as  a  class)  be  deemed  to  be  a  variation  of  the  rights  of  such  shares.A reduction of the capital paid up on any shares of any class will not be deemed to constitute avariation or abrogation of the rights attached to those shares. A purchase or redemption by theCompany of any of its own shares in accordance with the provisions of the Statutes and of theArticles shall not be deemed to be a variation of the rights attaching to any shares.

(e) Transfer of shares

The Shares may be held in certificated or uncertificated form. Shares in uncertificated form maybe transferred otherwise than by written instrument in accordance with the Statutes and relevantsubordinate legislation.

Transfers of Shares in certificated form may be effected by an instrument in writing in any usualor common form or in any other form acceptable to the Directors. Any instrument of transfer shallbe signed by or on behalf of the transferor and (except in the case of fully paid shares) by or onbehalf of the transferee. The transferor shall be deemed to remain the holder of the shares untilthe name of the transferee is entered in the Company’s register of members.

The Directors may,  in  their  absolute  discretion  (but  subject  to  any  rules  or  regulations  of  theLondon Stock Exchange or any rules published by the FCA applicable to the Company from timeto  time) and without assigning any  reason  therefore,  refuse  to  register  the  transfer of a sharewhich is in respect of a share which is not fully paid, or which is in favour of more than four jointtransferees  or  which  is  in  respect  of  more  than  one  class  of  shares  or  which  has  not  beenpresented for registration duly stamped accompanied by the share certificates for the shares towhich the transfer relates and such other evidence as the Directors may reasonably require toshow the right of the transferor to make the transfer.

(f)       Dividends

Subject  to  the  provisions  of  the  Statutes  and  the  Articles,  the  Company  may  by  ordinaryresolution declare dividends to be paid to the members in accordance with their respective rightsand interests in the profits, but not exceeding the amount recommended by the Directors.

No dividends or moneys payable by  the Company  in respect of a share shall bear  interest asagainst  the  Company  unless  otherwise  provided  by  the  rights  attached  to  the  share.  TheDirectors may pay interim dividends if it appears to them that they are justified by the profits ofthe Company available for distribution. The Directors may, by ordinary resolution of the Company,direct  that  dividends  be  paid  otherwise  than  in  cash,  for  example  in  the  form  of  shares  ordebentures.

All unclaimed dividends or other sums payable on or in respect of a share may, after one year ofbeing  declared,  be  invested  or  otherwise made use  of  by  the Directors  for  the  benefit  of  theCompany until claimed and the Company shall not be constituted a trustee in respect thereof.Any dividend which is unclaimed for a period of 12 years from the date on which the dividendbecame due for payment shall be forfeited and cease to remain owing by the Company.

(g) Borrowing powers

The Directors may exercise all the powers of the Company to borrow money, to indemnify andguarantee,  to mortgage or charge all or any part of  its undertaking, property and assets bothpresent  and  future  (including  uncalled  capital)  and,  subject  to  the  Companies  Act,  to  issuedebentures, or any other securities, and give security whether outright or as collateral security forany debt, liability or obligation of the Company or any third party.

The Articles include a cap on borrowing powers which is equal to two times “Adjusted Capital andReserves” (as such term is defined in Article 102.3).

(h)      Suspension of rights

If a member or any other person appearing to be interested in shares held by such shareholderhas been duly served with notice under section 793 of  the Companies Act and  is  in default  in

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supplying  to  the Company within 14 days  (or such  longer period as may be specified  in suchnotice) the information thereby, required, then (if the Directors so resolve) such member shall notbe entitled to vote or to exercise any right conferred by membership in relation to meetings of theCompany  in  respect  of  the  shares  which  are  the  subject  of  such  notice. Where  the  holdingrepresents at least 0.25 per cent. of the issued shares of that class (calculated exclusive of anytreasury shares of that class) the payment of dividends may be withheld, and such member shallnot be entitled to transfer such shares otherwise than by an arms-length sale.

(i)       Constitution of the Board

The  minimum  number  of  Directors  shall  not  be  less  than  two  and  the  maximum  number  ofDirectors shall be fifteen.

The quorum necessary  for  the  transaction of  business by  the Board  is  two, unless otherwisedetermined by the Board.

(j)       Retirement of directors by rotation

At every annual general meeting of  the Company one  third  (or  the nearest number  to but notexceeding one third) of the Directors shall retire from office. A Director who retires at an annualgeneral meeting shall be eligible  for  re-election. The Directors are not subject  to a mandatoryretirement age.

(k)      Remuneration of directors

Each of the Directors may be paid a fee at such rate as may from time to time be determined bythe Board not exceeding in aggregate £250,000 per annum. A fee payable to a Director underthis provision of the Articles is distinct from any salary, remuneration or other amount payable tohim pursuant to other provisions of the Articles and accrues from day to day.

Each Director may  also  be  paid  all  reasonable  travelling,  hotel  and  other  expenses  properlyincurred by him in respect of or about the performance of his duties as a Director including anyexpenses incurred in connection with his attendance at meetings of the Directors of the Companyor otherwise for the purpose of enabling him to discharge his duties as a Director.

If by arrangement with  the Board any Director performs special duties or services outside hisordinary  duties  as  a  Director  (and  not  as  an  executive  or  employee)  he  may  be  paid  suchreasonable additional remuneration as the Board may determine. The salary or remuneration ofany Director who holds an employment or executive office may be either a fixed sum of moneyor  may  altogether  or  in  part  be  governed  by  business  done  or  profits  made  or  otherwisedetermined by the Board, and may be in addition to or in lieu of any fee payable to him for hisservices as a Director.

(l) Permitted interests of directors

Subject  to  the provisions of  the Companies Act and provided he has declared  the nature andextent of his interest in accordance with the requirements of the Companies Act, a Director whois in any way, whether directly or indirectly, interested in an existing or proposed transaction orarrangement  with  the  Company  may  be  (a)  a  party  to  or  interested  in  any  transaction  orarrangement  with  the  Company  or  in  which  the Company  is  otherwise  interested;  (b)  act  byhimself through his firm in a professional capacity for the Company (otherwise than as auditor)and he or his firm shall be entitled to remuneration for professional services as if he were not aDirector; (c) become a Director or other officer of, or be employed by, or a party to a transactionor arrangement with, or otherwise  interested  in, any body corporate  in which  the Company  isotherwise  interested;  and  (d)  hold  any  office  or  place  of  profit  with  the  Company  (except  asauditor) in conjunction with his office as a Director for such period and upon such terms, includingas to remuneration, as the Board may decide.

A Director shall not, save as he may otherwise agree, be accountable to the Company for anybenefit which he derives from any such contract, transaction or arrangement or from any suchoffice  or  employment  or  from any  interest  in  any  such  body  corporate  and  no  such  contract,transaction or arrangement shall be liable to be avoided on the grounds of any such interest orbenefit.

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(m)     Restrictions of voting of directors

A Director  shall  not  vote  or  be  counted  in  the  quorum on  any  resolution  concerning  his  ownappointment as the holder of any office or place of profit with the Company or any company inwhich the Company is interested.

A Director shall not be entitled to vote or be counted in the quorum on any resolution which maygive rise to a conflict of interest unless the Board has authorised that conflict but is entitled to voteand  be  counted  in  the  quorum  in  respect  of  any  resolution  concerning  any  of  the  followingmatters:

(i)       the giving of any security, guarantee or indemnity in respect of money lent or obligationsincurred by him or any other person at the request of or for the benefit of the Company orany of its subsidiary undertakings;

(ii)      the giving of any security, guarantee or indemnity to a third party in respect of a debt orobligation of the Company or any of its subsidiary undertakings for which he has assumedresponsibility in whole or in part either alone or jointly with others, under a guarantee orindemnity or by the giving of security;

(iii)      any proposal or contract concerning an offer of shares or debentures or other securities ofor by the Company or any of  its subsidiary undertakings for subscription or purchase  inwhich placing he is or is to be interested as a holder of securities or as a participant in theundertaking or sub-underwriting thereof;

(iv)     any arrangement for the benefit of employees of the Company or any of  its subsidiarieswhich  only  gives  him  benefits  which  are  generally  given  to  employees  to  whom  thearrangement relates;

(v)      any  arrangement  concerning  any  other  company  in  which  he  is  interested,  directly  orindirectly and where as an officer or member or otherwise howsoever provided  that he(together with any person connected (within the meaning of section 252 of the CompaniesAct) with him) knows he is not the holder of or interested in shares representing one percent. or more of any class of the equity share capital or voting rights;

(vi)     a contract relating to a pension, superannuation or similar scheme or a retirement, death,disability benefits scheme or employees’ share scheme which gives the Director benefitswhich are also generally given to the employees to whom the scheme relates; and

(vii)     any  contract  for  insurance against  any  liability  of  any Directors  or  any group of  peoplewhich include Directors which the Company can buy or renew.

The Board may, in accordance with the Articles authorise any matter or situation which if not soauthorised  would  involve  a  Director  breaching  his  duty  under  the  Companies  Act  to  avoidconflicts of interest.

(n)      Redeemable shares

Subject to the Companies Act and to any rights attaching to existing shares, any share may beissued which can be redeemed or can be liable to be redeemed at the option of the Company orthe holder. The Board may determine  the  terms, conditions and manner of  redemption of anyredeemable  shares  which  are  issued.  Such  terms  and  conditions  shall  apply  to  the  relevantshares as if the same were set out in the Articles.

(o) Conversion of shares

The Company may from time to time, by ordinary resolution and subject to the Companies Act,convert all or any of its fully paid shares into stock of the same class and denomination and mayfrom time to time in like manner convert such stock into fully paid up shares of the same classand denomination.

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(p) Rights to share in any surplus in the event of liquidation

In the event of liquidation of the Company the holders of the shares are entitled pari passu to any

surplus dividends. A liquidator may, with the sanction of an extraordinary resolution, divide the

assets among the members in specie.

(q) Objects

The Articles contain no specific restrictions on the Company’s objects and therefore, by virtue of

section 31(1) of the Companies Act the Company’s objects are unrestricted.

5. Share incentive plans and bonus schemes

(a)      The Supreme plc Enterprise Management Incentive Scheme 2018 (“the EMI Scheme”)

The Company established the EMI Scheme on 14 September 2018 on the basis set out in this

paragraph.

Grants under the EMI Scheme may be made by the Company as subscription Options or, with

the consent of the Directors, by an existing shareholder over shares already issued.

(i) Potential grantees

The grant of Options to any individual under the EMI Scheme is at the absolute discretion

of the Directors.

An individual will only be granted Options if they are a bona fide employee (including an

executive  director  but  excluding  any  person  who  has  a  30  per  cent.  interest  in  the

Company including the interest of his associates) who works at least 25 hours per week

for the Group (or, if less, at least 75 per cent. of their working time).

(ii) Life of the EMI Scheme

Options may  be  granted  at  any  time  in  the  ten-year  period  beginning with  the  date  of

adoption of  the EMI Scheme provided  that no grant may be made at any  time when  it

would cause any person to be in breach of any applicable rules relating to share dealings

by directors and employees.

(iii) Individual limits on number of Options

Under  the EMI Scheme,  the grant of Options  is  limited so  that an  individual will not be

granted options if the total market value of the Shares comprised in those Options at the

time of the proposed grant, when added to the total market value (at the date of grant) of

Shares under unexercised Options already granted  to him under  the EMI Scheme (and

any share scheme approved under Schedule 4 to ITEPA 2003) would exceed £250,000.

(iv) Aggregate limits on number of Options

The maximum number of Shares over which Options may be granted  in  total under  the

EMI Scheme may not exceed 10 per cent. of the issued share capital of the Company for

the time being.

The maximum number of Shares over which Options may be granted  in  total under  the

EMI  Scheme  and  any  other  Option  Schemes  adopted  by  the  Company  may  not  in

aggregate exceed 15 per cent. of the issued Share Capital of the Company for the time

being.

In any event, the total market value (at the date of grant) of shares which are subject to

unexercised Options under the EMI Scheme may not exceed £3,000,000 at the present

time due to HMRC restrictions.

(v) Exercise Price

The price at which Options may be exercised will be set by  the Directors at  the date of

grant but, in the case of subscription options, will not be less than the nominal value of the

Shares.

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(vi) Conditions of Exercise

Objective conditions may be imposed by the Directors that have to be complied with beforeOptions can be exercised.

(vii) Timing of Exercise

Unless  the  Directors  permit  earlier  exercise  at  their  discretion,  Options  may  not  beexercised unless there is a disposal of at least 90 per cent. of the issued share capital ofthe Company or its shares are listed on a recognised stock exchange or admitted to AIM.

In the case of such a disposal Options are exercisable immediately. In the case of listingor admission, Options may not (unless the Directors permit otherwise) be exercised as to50 per  cent. no  earlier  than  the  first  anniversary  of  listing  or  admission  and  as  to  theremaining 50 per cent. no earlier than the second anniversary of listing or admission.

In any event Options may not be exercised later than the tenth anniversary of the date ofthe grant (or such earlier date as may be specified when granted).

If  an  optionholder  leaves  employment  exercise  of  any  outstanding  Options  is  at  theDirectors’ discretion. Any Option not so exercised will lapse.

(viii)    Status of Options

All Options are non-transferable. Shares issued following exercise of any Option will rankpari passu with Shares then in issue, save as regards any rights attaching to Shares byreference  to  a  record date prior  to  the date of  exercise of  the Option. Options may beexercised  in  whole  or  in  part  subject  to  a  minimum  number  of  Options  that  may  beexercised at any one time.

(ix) Adjustment of Options

The Directors may adjust  the number of Shares under Option and available  for Optionand/or the Option price to take account of any Shares issued by the Company (other thanas consideration for an acquisition) and/or any capitalisation, consolidation, sub-division orreduction of the capital of the Company.

(x) Amendment of EMI Scheme

The EMI Scheme may be amended by the Directors but to the extent that any amendmentwould be advantageous in relation to certain rights of eligible employees or Option holdersthe consent of the Company in general meeting is required.

(xi) Exchange of Options

The rules of the EMI Scheme make detailed provision for the exercise and/or exchange ofoptions in the event of a takeover or reverse takeover of the Company.

(xii) Tax

The EMI Scheme  requires  optionholders  to  be  responsible  for  any  employer’s  nationalinsurance contributions otherwise payable by the Company on the grant and/or exerciseand/or disposal of any Options and to indemnify the Company against any income tax duein such circumstances.

(xiii) Grants of Options

As noted at paragraph 3(g) above, on 14 September 2018, the Company granted Optionsunder the EMI Scheme over a total of 2,174,120 Shares at an exercise price of £0.3837.Further details of those Options in favour of Directors and Senior Managers are set out atparagraph 6(b) below.

As part of the arrangements permitting early exercise of a proportion of Options describedat paragraph 3(g) above, those employees who have accepted the invitation are requirednot to exercise 50 per cent. of the balance of their Options until the second anniversary of

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Admission and the remaining 50 per cent. of the balance of their Options until the fourthanniversary of Admission.

(b) The Supreme plc Sharesave Scheme 2021 (“the SAYE Scheme”)

The Company established the SAYE Scheme on 26 January 2021 on the basis set out  in thisparagraph.

Grants under the SAYE Scheme may be made by the Company as subscription Options or, withthe  consent of  the Remuneration Committee,  by an existing  shareholder over  shares alreadyissued.

(i) Potential grantees

All employees (and executive directors working at least twenty five hours each week) ofthe Group who have achieved the qualifying length of service at the proposed date of grantmust be invited to participate in the SAYE Scheme on similar terms. It  is envisaged thatthe qualifying period of service will initially be set at 3 months, but this period can be varied(up to a maximum of five years) by the Directors for future grants.

(ii) Life of the SAYE Scheme

Options (other than on the first occasion of invitations to participate following adoption ofthe Scheme) may only be granted within 42 days of  the publication of  the Group’s half-yearly report or annual accounts. In any event no Options may be granted later than theten-year period beginning with the date of adoption of the SAYE Scheme.

(iii) Individual limits on number of Options

Under  the SAYE Scheme, an  individual who wishes  to accept an  invitation  to apply  foroptions to be granted to him or her must take out a 3 year or 5 year savings contract (or acombination  of  both)  with  an  approved  savings  body  selected  by  the  Company.  Theindividual makes a fixed monthly contribution over the life of the savings contract and onmaturity receives a tax-free bonus. The monthly contribution can be a minimum of £10 anda maximum of £500 (or such other lower maximum amount as the Directors decide). If anindividual  is  granted  options  on  more  than  one  occasion,  the  maximum  total  monthlycontribution  under  all  the  relevant  savings  contracts  is  capped  at  £500. The maximumnumber of options an individual can be granted is calculated by dividing the total amountthat will be repayable to him at the end of the relevant savings contract by the exerciseprice for each relevant option. The SAYE Scheme contains detailed provisions for scalingback applications where any of  the scheme limits on the number of shares that may beissued would otherwise be breached.

(iv) Aggregate limits on number of Options

The maximum number of Shares over which Options may be granted  in  total under  theSAYE Scheme may not exceed 10 per cent. of the issued share capital of the Companyfor the time being.

The maximum number of Shares over which Options may be granted  in  total under  theSAYE Scheme and any other Option Schemes adopted by the Company in any ten yearperiod  (but  excluding  any  Options  granted  prior  to  Admission)  may  not  in  aggregateexceed 10 per cent. of the issued Share Capital of the Company for the time being.

(v) Exercise Price

The price at which Options may be exercised will be set by the Directors at  the date ofgrant and may be at a discount of up to a maximum of 20 per cent. against  the marketvalue at the date of grant of the Shares over which they are granted.

(vi) Conditions of Exercise

No conditions of exercise will be imposed in relation to options granted under the SAYEScheme.

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(vii) Timing of Exercise

Other than in the case of a takeover or demerger or similar event, an Option will generallybe exercisable by the holder in relation to the SAYE Scheme within the six month periodafter the bonus becomes payable on his or her relevant savings contract. Any option notso exercised will lapse. If an optionholder leaves employment earlier by reason of injury,disability,  ill-health  redundancy or  retirement at  65 any Option may be exercised within6 months of such event happening or, if the optionholder has died, within 12 months of hisdeath  by  his  personal  representatives.  If  an  optionholder’s  employer  ceases  to  be  amember of the Group or his employment is subject to a relevant transfer under the Transferof Undertakings (Protection of Employment) Regulations 2006 he may retain his Option. Ifan optionholder leaves the employment of the Group for any other reason, any outstandingOptions lapse.

(viii) Status of Options

All Options are non-transferable. Shares issued following exercise of any Option will rankpari passu with Shares then in issue, save as regards any rights attaching to Shares byreference  to  a  record date prior  to  the date of  exercise of  the Option. Options may beexercised  in  whole  or  in  part  subject  to  a  minimum  number  of  Options  that  may  beexercised at any one time.

(ix)     Adjustment of Options

The Directors may adjust  (subject  to confirmation  in writing by  the auditors  for  the  timebeing that such adjustment is fair and reasonable in their opinion) the number of Sharesunder  Option  and  available  for  Option  and/or  the  Option  price  to  take  account  of  anyShares issued by the Company (other than as consideration for an acquisition) and/or anycapitalisation, consolidation, sub-division or reduction of the capital of the Company.

(x) Amendment of SAYE Scheme

The SAYE Scheme may be amended by the Directors (provided the amendment does notprejudice the tax status of the SAYE Scheme) but to the extent that any amendment wouldbe advantageous in relation to certain rights of eligible employees or Option holders theconsent of the Company in general meeting is required.

(xi) Exchange of Options

The rules of the EMI Scheme make detailed provision for the exercise and/or exchange ofoptions in the event of a takeover or reverse takeover of the Company.

(xii) Grants of Options

No grants of Options have yet been made under the SAYE Scheme.

(c) The Supreme plc Company Share Option Plan 2021 (“the CSOP Scheme”)

The Company established the CSOP Scheme on 26 January 2021 on the basis set out in thisparagraph.

Grants under the CSOP Scheme may be made by the Company as subscription Options or, withthe  consent of  the Remuneration Committee,  by an existing  shareholder over  shares alreadyissued.

(i)       Potential grantees

The  grant  of  Options  to  any  individual  under  the  CSOP  Scheme  is  at  the  absolutediscretion of the Remuneration Committee.

An individual may only be granted options under the CSOP Scheme if he is an employeeof the Group. Additionally, executive directors are required to work for the Group for at least25 hours a week in order to be granted such Options.

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(ii) Life of the CSOP Scheme

Options may  be  granted  at  any  time  in  the  ten-year  period  beginning with  the  date  ofadoption of the CSOP Scheme provided that no grant may be made at any time when itwould cause any person to be in breach of any applicable rules relating to share dealingsby directors and employees.

(iii) Individual limits on number of Options

Under the CSOP Scheme, the grant of Options is limited so that an individual will not begranted options if the total market value of the Shares comprised in those Options at thetime of the proposed grant, when added to the total market value (at the date of grant) ofShares under unexercised Options already granted to him under the CSOP Scheme wouldexceed £30,000.

(iv) Aggregate limits on number of Options

The maximum number of Shares over which Options may be granted  in  total under  theCSOP Scheme may not exceed 10 per cent. of the issued share capital of the Companyfor the time being.

The maximum number of Shares over which Options may be granted  in  total under  theCSOP Scheme and any other Option Schemes adopted by the Company in any ten yearperiod  (but  excluding  any  Options  granted  prior  to  Admission)  may  not  in  aggregateexceed 10 per cent. of the issued Share Capital of the Company for the time being.

(v) Exercise Price

The price at which Options may be exercised will be set by the Remuneration Committeeat the date of grant but, in the case of subscription options, will not be less than the marketvalue at the date of grant of the Shares over which they are granted.

(vi) Conditions of Exercise

Objective conditions may be  imposed by  the Remuneration Committee  that have  to becomplied with before Options can be exercised.

(vii)     Timing of Exercise

Other  than  in  the  case  of  a  takeover  or  demerger  or  similar  event,  an  Option  will  beexercisable by the holder at any time between the third and tenth anniversaries of the dateof  the grant.  If an optionholder dies  then his personal  representatives may exercise hisOption within 12 months of his death. If an optionholder leaves employment for any otherreason  exercise  of  any  outstanding  Options  is  at  the  Remuneration  Committee’sdiscretion. Any Option not so exercised will lapse.

(viii) Status of Options

All Options are non-transferable. Shares issued following exercise of any Option will rankpari passu with Shares then in issue, save as regards any rights attaching to Shares byreference  to  a  record date prior  to  the date of  exercise of  the Option. Options may beexercised  in  whole  or  in  part  subject  to  a  minimum  number  of  Options  that  may  beexercised at any one time.

(ix) Adjustment of Options

The Remuneration Committee may adjust (subject to confirmation in writing by the auditorsfor the time being that such adjustment is fair and reasonable in their opinion) the numberof Shares under Option and available for Option and/or the Option price to take account ofany Shares issued by the Company (other than as consideration for an acquisition) and/orany capitalisation, consolidation, sub-division or reduction of the capital of the Company.

(x) Amendment of CSOP Scheme

The CSOP Scheme  may  be  amended  by  the  Remuneration  Committee  (provided  theamendment does not prejudice the tax status of the CSOP Scheme) but to the extent that

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any amendment would be advantageous in relation to certain rights of eligible employeesor Option holders the consent of the Company in general meeting is required.

(xi) Exchange of Options

The rules of the CSOP Scheme make detailed provision for the exercise and/or exchangeof options in the event of a takeover or reverse takeover of the Company.

(xii)     Tax

The CSOP Scheme requires optionholders to be responsible for any employer’s nationalinsurance contributions otherwise payable by the Company on the grant and/or exerciseand/or disposal of any Options and to indemnify the Company against any income tax duein such circumstances.

(xiii)    Grants of Options

No grants of Options have yet been made under the CSOP Scheme.

(d) The Supreme plc Unapproved Share Option Scheme 2021 (“the Unapproved Scheme”)

The Company established the Unapproved Scheme on 26 January 2021 on the basis set out inthis paragraph.

Grants under the Unapproved Scheme may be made by the Company as subscription Optionsor, with  the consent of  the Remuneration Committee, by an existing shareholder over  sharesalready issued.

(i) Potential grantees

The grant of Options to any individual under the Unapproved Scheme is at the absolutediscretion of the Remuneration Committee.

An  individual  may  only  be  granted  options  under  the  Unapproved  Scheme  if  he  is  anemployee of the Group. Additionally, executive directors are required to work for the Groupfor at least 25 hours a week in order to be granted such Options.

(ii) Life of the Unapproved Scheme

Options may  be  granted  at  any  time  in  the  ten-year  period  beginning with  the  date  ofadoption of  the Unapproved Scheme provided  that  no grant may be made at  any  timewhen it would cause any person to be in breach of any applicable rules relating to sharedealings by directors and employees.

(iii) Individual limits on number of Options

Under the Unapproved Scheme, the grant of Options is limited (other than in the case ofthe Chief Executive Officer)  so  that an  individual will  not be granted options  if  the  totalmarket value of the Shares comprised in those Options at the time of the proposed grant,when added to the total market value (at the date of grant) of Shares under any other shareoption  scheme adopted by  the Company, would  exceed three times  the amount  of  theemoluments (excluding benefits-in-kind) expressed as an annual rate then payable to suchperson.

(iv) Aggregate limits on number of Options

The maximum number of Shares over which Options may be granted  in  total under  theUnapproved  Scheme  may  not  exceed  10 per  cent. of  the  issued  share  capital  of  theCompany for the time being.

The maximum number of Shares over which Options may be granted  in  total under  theUnapproved Scheme and any other Option Schemes adopted by the Company in any tenyear period (but excluding any Options granted prior to Admission) may not in aggregateexceed 10 per cent. of the issued Share Capital of the Company for the time being.

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(v)      Exercise Price

The price at which Options may be exercised will be set by the Remuneration Committeeat the date of grant but, in the case of subscription options, will not be less than the nominalvalue of the Shares.

(vi) Conditions of Exercise

Objective conditions may be  imposed by  the Remuneration Committee  that have  to becomplied with before Options can be exercised.

(vii) Timing of Exercise

Unless  the  Remuneration  Committee  specifies  when  granting  any  Options  an  earlierexercise date (and other than in the case of a takeover or demerger or similar event) anoption  will  be  exercisable  by  the  holder  at  any  time  between  the  third  and  tenthanniversaries  of  the  date  of  the  grant.  If  an  optionholder  dies  then  his  personalrepresentatives may exercise his Option within 12 months of his death. If an optionholderleaves  employment  for  any  other  reason exercise  of  any  outstanding Options  is  at  theRemuneration Committee’s discretion. Any Option not so exercised will lapse.

(viii) Status of Options

All Options are non-transferable. Shares issued following exercise of any Option will rankpari passu with Shares then in issue, save as regards any rights attaching to Shares byreference  to  a  record date prior  to  the date of  exercise of  the Option. Options may beexercised  in  whole  or  in  part  subject  to  a  minimum  number  of  Options  that  may  beexercised at any one time.

(ix) Adjustment of Options

The Remuneration Committee may adjust (subject to confirmation in writing by the auditorsfor the time being that such adjustment is fair and reasonable in their opinion) the numberof Shares under Option and available for Option and/or the Option price to take account ofany Shares issued by the Company (other than as consideration for an acquisition) and/orany capitalisation, consolidation, sub-division or reduction of the capital of the Company.

(x) Amendment of Unapproved Scheme

The Unapproved Scheme may be amended by the Remuneration Committee but  to  theextent that any amendment would be advantageous in relation to certain rights of eligibleemployees or Option holders the consent of the Company in general meeting is required.

(xi) Exchange of Options

The  rules  of  the  Unapproved  Scheme make  detailed  provision  for  the  exercise  and/orexchange of options in the event of a takeover or reverse takeover of the Company.

(xii)     Tax

The  Unapproved  Scheme  requires  optionholders  to  be  responsible  for  any  employer’snational  insurance contributions otherwise payable by the Company on the grant and/orexercise  and/or  disposal  of  any  Options  and  to  indemnify  the  Company  against  anyincome tax due in such circumstances.

(xiv)    Grants of Options

No grants of Options have yet been made under the Unapproved Scheme.

(e) Market Capitalisation Cash Bonus Scheme

The Company has established an all-employee bonus scheme which will pay a bonus (which theCompany may, but is not obliged to, satisfy by the issue of Shares and/or the grant of options) toall  participating  employees  equivalent  to  one  year’s  basic  salary  if  the  Company  achieves  amarket capitalisation of £1 billion over a period of 30 consecutive trading days on or before the

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fifth anniversary  of  Admission.  Participating  employees  are  those  with  at  least  12 monthscontinuous  service  at  the  date  this  is  achieved. Total  gross  payments  under  the  scheme  arelimited to £14,000,000, with all participants’ entitlements being scaled back accordingly.

6. Directors’ and other interests

(a)      The interests of each Director and Senior Manager and persons connected with them within themeaning of section 252 of the Companies Act, all of which are beneficial, save where stated tothe  contrary,  in  the  share  capital  of  the  Company  are  and  will,  following Admission  and  thePlacing, be as follows:

Immediately prior Following Admission,to Admission and the Placing

Number % of issued Number % of issued Director of Shares share capital of Shares share capital

Mark Cashmore                                                 –                        –               29,850                   0.03Sandy Chadha (1)                             110,005,000                    100        66,126,845                 56.76Simon Lord                                                        –                        –               37,313                   0.03Paul McDonald                                                  –                        –                 7,462                   0.01Suzanne Smith                                                  –                        –               18,656                   0.02

(1) Sandy Chadha’s interests in Shares include 27,501,250 Shares held by Supreme 8 Limited, a company in which he

is  the  sole  shareholder  and  a  director  and,  in  respect  of  the  period  prior  to Admission,  5,500,250  Shares,  and

following Admission and the Placing, 3,306,343 Shares,  in both cases held by him and his wife, Aditi Chadha as

trustees of the Chadha Discretionary Trust 2020.

(b)      The following Options have been granted to certain of the Senior Managers, such Options beingexercisable at the price and on the dates or occurrence of events shown below:

Exercise Senior No. of Option price per Manager Shares Scheme Date of Grant Share Expiry Date

Andrew Beaumont  195,529   EMI Scheme         14 September 2018    38.37p      13 September                                                                                                                                                 2028Michael Holliday      195,529   EMI Scheme         14 September 2018    38.37p      13 September                                                                                                                                                2028David Neilson          586,441   EMI Scheme         14 September 2018    38.37p      13 September                                                                                                                                                2028David Neilson          594,914   Unapproved                 4 January 2021    38.37p      13 September                                               option agreement                                                                     2028

          In respect of the Options listed above Andrew Beaumont and Michael Holliday have, conditionallyon Admission each exercised his right to acquire 68,435 Shares which will be registered in thename of Supreme Nominees Limited and sold in the Placing. David Neilson has, conditionally onAdmission exercised his right  to acquire 205,254 Shares under the EMI Scheme and 208,219under  the  unapproved  option  agreement  which  will  be  registered  in  the  name  of  SupremeNominees Limited and sold in the Placing.

(c)      Save as disclosed above, no Director or Senior Manager has any interest in the share capital orloan capital of the Company or any of its subsidiaries nor does any person connected with them(within  the meaning  of  section  252  of  the  Companies Act)  have  any  such  interests,  whetherbeneficial  or  non-beneficial. None  of  the Directors  or members  of  their  family  has  a  financialproduct whose value in whole or  in part  is determined directly or  indirectly by reference to theprice of Existing Ordinary Shares or the Placing Shares.

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(d)      The  Directors  have  held  the  following  directorships  and/or  been  a  partner  in  the  followingpartnerships within the five years prior to the date of this document:

Current directorships Previous directorshipsName and partnerships and partnerships

   Supreme plc Bertram Trading Limited 

Connect Limited 

Connect2U Limited 

Connect Books Limited 

Connect Care Limited 

Connect Education Limited

Connect Education & Care Limited 

Connect Group Plc

Connect Logistics Limited

Connect News & Media Limited 

Connect Parcel Freight Limited 

Connect Parcels Limited

Connect Services Limited

Connect Specialist Distribution

Group Limited

Dawson Iberica SL

Dawson Espana Agencia de

Ediciones SL

Dawson Limited

Dawson Book Services Limited

Dawson Books Limited

Dawson Finance Company Limited

Dawson France SAS

Dawson Guarantee Company

Limited 

Dawson Holdings Limited

Dawson Media Direct Australia Pty

Ltd

Dawson Media Direct GmbH

Dawson Media Direct Holdings

Inc.

Dawson Media Direct Inc.

Dawson Media Direct Limited

Dawson Media Direct China

Limited

Dawson Media Direct NV

Dawson Media Direct Iberica SL

Dawson Media Services Limited

Dawson Medya Anonim Sirke

Dawson Overseas Holdings

Limited 

Dawson UK Limited

DMD Holdings Limited (JAFZA)

Erasmus Antiquariaat Boekhandel

BV

Hammond Bridge Limited

Hammond Bridge Trustees Limited 

Hedgelane Limited

Houtschild Internationale

Boekhandel BV

Mark Cashmore

167

Current directorships Previous directorshipsName and partnerships and partnerships

   

   

Jack’s Beans Limited 

Magpie Investments Limited 

Martin-Lavell Limited

Pass My Parcel Limited 

Phantom Media Limited

Smiths News plc

Smiths News Distribution Limited

Smiths News Limited

Smiths News Instore Limited

Smiths News Investments Limited

Smiths News Holdings Limited

Smiths Group News Middle East

FZ LLC

Smiths News Trading Limited

Studentpacks Limited

Supreme plc

Supply Zone Limited

Surridge Dawson (Holdings)

Limited 

The Big Green Euro Machine

Limited

The Big Green Parcel Holding

Company Limited

The Big Green Parcel Group

Limited

The Big Green Parcel Machine

Limited

The Consortium Limited

RM Educational Resouces Limited

Tuffnells Parcels Express Limited

Wordery.Com Limited

Mark Cashmore

(continued)

Battery Force Limited

CNM Trading Limited

Millions and Millions Limited

Nash Peters LLP

Powerquick Limited

Provider Distribution Limited

Supreme plc

Supreme 8 Limited

Supreme 88 Limited

Supreme Holdco Limited

Supreme Imports Limited

Total CBD Limited

VN Labs Limited

88 Vape Limited

Bargain Foods Limited

Beyondnewco104 Limited

Lazoron Plc

Liquid Vape UK Limited

Luminoso Limited

Navanti Limited

Sandychadha.Com Limited

SI 8 Ltd

VCell Limited

Chop Retail Stores Limited

Sandy Chadha

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Current directorships Previous directorshipsName and partnerships and partnerships

   

   

   

(e)      Sandy Chadha was:

(i)       appointed as a director of Bargain Foods Limited on 28 March 2014 and remained as adirector until  it was dissolved on 7 March 2017  following a compulsory winding up. On4 December  2014  the High Court  of  Justice,  on  the  petition  of  a  creditor,  ordered  thecompany to be wound up. There was estimated to be a deficit to creditors of approximately£44,774;

Arete Capital Partners LLP

Arete Investors 1 (Nominees)

Limited

Arete Investors 2 (Nominees)

Limited

Arete Investors 3 (Nominees)

Limited

Arete Investors 4 (Nominees)

Limited

Arete Investors 5 (Nominees)

Limited

Arete Risk Services 1 (Nominees)

Limited

Arete Risk Services 2 (Nominees)

Limited

Arete Risk Services 3 (Nominees)

Limited

Supreme plc

GCA Altium Limited

GCA Altium Corporate Finance

Limited

WW Initial Investors LLP

Simon Lord

Supreme plc B&M European Value Retail S.A.

B&M European Value Retail 1 SARL

B&M European Value Retail 2 SARL

B&M European Value Retail

Holdco 1 Ltd

B&M European Value Retail

Holdco 2 Ltd

B&M European Value Retail

Holdco 3 Ltd

B&M European Value Retail

Holdco 4 Ltd

B&M Retail Limited

B&M European Value Retail

Germany GmbH

Cooltrader Limited

EV Retail Limited

Heron Food Group Limited

Heron Foods Limited

Heron Properties (Hull) Limited

Retail Industry Apprenticeships

LimitedPaminvest SAS

Paul McDonald

Bedford Packaging Limited

Supreme plc         

Supreme Imports Limited

Team Hours Limited (a company

registered in the Republic of

Ireland)

Suzanne Smith

169

(ii)      appointed as a director of Supreme Imports (Wholesale) Limited on 21 October 1988 andremained  as  a  director  until  it  was  dissolved  on  17 May  2012  following  a  compulsorywinding  up.  On  24 August  2007  the  company  entered  administration  which  ended  on 3 September  2008 when  the  company was  placed  into  creditors  voluntary winding  up.There was estimated to be no deficit to creditors on dissolution; and

(iii)      appointed as a director of Gemini Products Limited on 14 May 2003 and remained as adirector  until  it  was  dissolved  on  17  November  2009  following  a  creditors  voluntaryliquidation  that  commenced  on  29  July  2008.  There  was  estimated  to  be  a  deficit  tocreditors of approximately £41,000.

(f)       Paul McDonald was:

(i)       appointed  as  a  director  of  TJ  Hughes  Limited  on  12  January  2011  and  resigned  on30 April 2011. On 30 June 2011 administrators were appointed by Endless LLP and theadministration moved to a creditors’ voluntary liquidation on 24 December 2012 and wassubsequently  dissolved  on  29  March  2017.  There  was  estimated  to  be no deficit  tocreditors on dissolution;

(ii)      appointed as a director of TJ Hughes (Properties) Company Limited on 12 January 2011and resigned on 30 April 2011. On 30 June 2011 administrators were appointed and theadministration moved to a creditors’ voluntary liquidation on 24 December 2012 and wassubsequently dissolved on 23 March 2017. There was estimated to be a deficit to creditorsof approximately £28.7 million;

(iii)      appointed as a director of TJ Hughes (Holdings) Company Limited on 12 January 2011 andresigned on 30 April 2011. On 30 June 2011 administrators were appointed by EndlessLLP and the administration moved to a dissolution by notice on 24 December 2012 andwas subsequently dissolved on 24 March 2013. There was estimated  to be a deficit  tocreditors of approximately £1.2 million.

(iv)     appointed  as  a  director  of  TJ  Hughes  (Investments)  Limited  on  12  January  2011  andresigned  on  30  April  2011.  On  30  June  2011  administrators  were  appointed and  theadministration  moved  to  a  dissolution on  24  December  2012  and  was  subsequentlydissolved  on 24  March  2013.  There  was  estimated  to  be  a  deficit  to  creditors  ofapproximately £47.2 million.

(v)      appointed as a director of Noteframe Limited on 9 July 2007 and resigned on 9 January2009. On 15 April 2008 administrators were appointed by Project Steve Debtco Limitedand  the  administration  moved  to  a dissolution  by  notice on 9 October  2008  and  wassubsequently dissolved on 9 January 2009. There was estimated to be a deficit to creditorsof approximately £22,384,000.

(g)      Save as disclosed above no Director:

(i)       has any unspent convictions in relation to fraudulent or indictable offences; or

(ii)      has been bankrupt or  the subject of an  individual  voluntary arrangement, or has had areceiver appointed to any asset of such Director; or

(iii)      has been a director of any company which, while he was a director or within 12 monthsafter  he  ceased  to  be  a  director,  had  a  receiver  appointed  or  went  into  compulsoryliquidation,  creditors  voluntary  liquidation,  administration  or  company  voluntaryarrangement, or made any composition or arrangement with its creditors generally or withany class of its creditors; or

(iv)     has been a partner of any partnership which, while he was a partner or within 12 monthsafter  he  ceased  to  be  a  partner,  went  into  compulsory  liquidation,  administration  orpartnership voluntary arrangement, or had a receiver appointed to any partnership asset;or

(v)      has had any public criticism and/or sanction by statutory or regulatory authorities (includingdesignated professional bodies); or

170

(vi)     has been disqualified by a court from acting as a director of a company or from acting inthe management or conduct of the affairs of any company.

(h)      Save as set out in paragraph 6(a) above and 6(k) below, so far as the Directors are aware, noperson,  directly  or  indirectly,  jointly  or  severally,  exercises  or  could  exercise  control  over  theCompany.

(i)       So far as the Directors are aware, there are no arrangements relating to the Group, the operationof which may at a subsequent date result in a change of control of the Company.

(j)       Save as disclosed in paragraph 6(a) above, and as set out below, the Company is not aware ofany person who will on Admission be directly or indirectly interested in 3 per cent. or more of theissued share capital or voting rights of the Company:

Immediately prior Following Admission to Admission and, the Placing

Number of % of issued Number of % of issued Shares share capital Shares share capital

Blackrock Investment Management                  –                        –          5,750,000               4.94%Canaccord Genuity Wealth Management         –                        –          5,700,000               4.89%Slater Investments Limited                                –                        –          5,600,000               4.81%Premier Miton Group Plc                                   –                        –          5,250,000               4.51%Jupiter Fund Management Plc                          –                        –          4,800,000               4.12%

(k)      None of the Company’s major holders of shares listed above has voting rights which are differentfrom other holders of Shares.

(l)       Save  in  respect  of  a  loan  to  Nash  Peters  Limited  (a  company  in  which  Sandy  Chadha  is  ashareholder)  which  has  a  balance  of  approximately  £1,800,000  there  are  no  loans made  orguarantees granted or provided by any member of the Group to or for the benefit of any Director.

(m)     Save as disclosed in paragraphs 8 and 10 below, no Director  is or has been interested in anytransaction which is or was unusual in its nature or conditions or significant to the business of theCompany or any of its subsidiaries during the current or immediately preceding financial periodor which were effected during any earlier financial period and remains in any respect outstandingor unperformed.

(n)      There are no conflicts of interest between any duties the Directors have to the Company and theirprivate interests and/or other duties they may have.

(o)      None of the Directors and no member of their respective families (as defined in the glossary tothe AIM Rules) is  interested in any related financial product referenced to the Shares (being afinancial product whose value is, in whole or in part, determined directly or indirectly by referenceto the price of the Shares, including a contract for difference or a fixed odds bet).

7. Directors service contracts and letters of appointment

(a)      Mark Cashmore entered into a letter of appointment with the Company dated 26 January 2021as a Non- executive Director of the Company. He is entitled to annual fees of £40,000 togetherwith the payment of reasonable expenses. The appointment is terminable on two months writtennotice by either party.

(b)      Sandy Chadha entered into a service agreement with the Company dated 26 January 2021 asChief Executive Officer. The agreement provides for an annual salary of £250,000, a monthly carallowance of £600, and an annual holiday entitlement of 30 days plus statutory holidays. Theagreement  contains  provisions  for  an  annual  bonus  of  up  to  100  per  cent.  of  salary  againsttargets set by  the  remuneration committee of  the Company. Mr Chadha  is also entitled  to  theprovision of private medical expenses and director’s  liability  insurance, certain other additionalbenefits and the reimbursement of other reasonable expenses. The agreement is terminable onnot less than 12 months written notice by either party.

(c)      Simon Lord entered into a letter of appointment with the Company dated 26 January 2021 as aNon-executive Director of the Company. He is entitled to annual fees of £45,000 together with

171

the  payment  of  reasonable  expenses.  The  appointment  is  terminable  on  two months  writtennotice by either party.

(d)      Paul McDonald entered into a letter of appointment with the Company dated 26 January 2021 asa Non- executive Chairman of the Company. He is entitled to annual fees of £55,000 togetherwith the payment of reasonable expenses. The appointment is terminable on two months writtennotice by either party.

(e)      Suzanne Smith entered into a service agreement with the Company dated 26 January 2021 asChief Finance Officer. The agreement provides for an annual salary of £150,000, and an annualholiday entitlement of 33 days inclusive of statutory holidays. The agreement contains provisionsfor an annual  bonus of  up  to 100 per  cent.  of  salary against  targets  set  by  the  remunerationcommittee  of  the  Company.  Mrs  Smith  is  also  entitled  to  the  provision  of  director’s  liabilityinsurance and the reimbursement of other reasonable expenses. The agreement is terminableon not less than 6 month’s written notice by either party.

(f)       Save as set out in this paragraph 7, there are no service agreements in existence between anyof the Directors and the Company or any Company in the Group.

(g)      Save as disclosed in this paragraph 7, there are no service contracts in existence between anyof the Directors and the Company or any Company in the Group that provide for benefits upontermination of employment.

8. Related party transactions

Details of transactions with related parties entered into by members of the Group during the period ofthe historical financial information and up to the date of this document are summarised below:

(a)      Details  of  certain  transactions  with  related  parties  entered  into  by  certain  subsidiaries  of  theCompany  for  the  nine  months  ended  31  March  2019  and  the  year  to  31  March  2020  arecontained  in  note  29  of  the  Historical  Financial  Information  in  Section  B  of  Part IV of  thisdocument and  in note 27 of  the Historical Financial  Information  in Section B of Part V of  thisdocument in the audited report and financial statements of Supreme Imports Limited for the twoyears ended 31 March 2019.

(b)      Supreme Imports Limited has made available to Nash Peters Limited (a company in which SandyChadha is a shareholder) an on demand unsecured loan facility of £1,625,338, paying 5 per cent.interest  per  annum. The  amount  due  is  approximately  £1,800,000. The loan  is  repayable  ondemand by no less than 24 months’ notice.

(c)      Supreme Imports Limited made available to Elena Dolce Limited a loan facility of £60,000. On orabout 27 July 2017 this loan was satisfied by the transfer to the Company of 1 ordinary share of£1 in the capital of Elena Dolce Limited by Naresh Patel for a consideration of £60,000. Stampduty was paid on such share  transfer. On 12 April 2018, Naresh Patel executed an  indemnityletter confirming, that the £60,000 due pursuant to the stock transfer had been satisfied by theloan monies received by Elena Dolce Limited from Supreme Imports Limited and that there is nofurther  liability  due  from Supreme Imports  Limited  to  Naresh  Patel.  This  share  is  owned  bySupreme Imports Limited at Admission. The Company has written off the value of the investmentin its accounts to 31 March 2020.

(d)      A share exchange agreement dated 8 March 2018 between Sandy Chadha and the Companypursuant to which the Company acquired 170 ordinary shares in the capital of SI Holdings (whichrepresented the entire issued share capital of that company) for an issue of 110,000,000 ordinaryshares of £0.20 each credited as fully paid in the capital of the Company.

(e)      A Relationship Agreement dated 26 January 2021 between the Company, Grant Thornton andSandy Chadha pursuant to which Sandy Chadha provided certain undertakings to the Companyto ensure  inter alia that  (i)  the Group  is  capable of  carrying on  its  business  independently  ofSandy Chadha and his associates (as defined therein but including Sandy Chadha’s nominees,family, trusts and any companies which such parties may control other than the Company or itssubsidiaries); (ii) any arrangements or agreements with such parties are on arms-length terms;and (iii) the independence of the Board (and its committees) is maintained, including that at all

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times a majority of the Board must be independent directors (as within the meaning of the QCACode). Sandy Chadha has a right, for so long as he and his associates (in aggregate) hold morethan 10 per cent. of the Company’s issued share capital, to nominate a Director for appointmentto the Board. Sandy Chadha has been confirmed as being the nominated director.

(f)       On 1 April  2017 Supreme Imports  Limited  purchased  the  entire  issued  share  capital  of VapeNation Limited from Sandy Chadha for £1.

(g)      On  10 April  2018,  Sandy  Chadha  executed  a  letter  of  indemnity  in  favour  of  the  Company,Supreme Imports Limited and Vape Nation Limited in relation to any losses which might occur inrelation  to  the  acquisition  of  Vape  Nation  Limited,  the  conduct  of  its  business  prior  to  theacquisition,  the  reconstitution  of  the  statutory  books  and  the  filing  of  inaccurate  confirmationstatements and annual returns by certain members of the Group.

(h)      On 10 April 2018 written  resolutions of Supreme Imports Limited were passed  to  ratify  (i)  theapproval  of  all  prior  accounts  (ii)  all  prior  transactions  concluded,  increases  in  share  capital,granting of authorities to allot shares, disapplications of statutory pre-emption rights, allotments,transfers of shares and dividends and (iii) all prior failures to correct inaccurate annual returns forthe period 2015-2016 and to release all claims it might have had against its current and formerdirectors in relation to such matters and any consequent breaches of duty.

(i)       By  an  agreement  dated  12  February  2020  and  made  between  Supreme  8  Limited  and  theCompany Supreme  8  Limited  lent  the Company  £3,392,000  unsecured  at  an  interest  rate  of3 per cent. above base rate. The loan is repayable on demand by no less than 24 months’ notice.

(j)       On 26 January 2021 Supreme Imports sold for £1 to Aditi Chadha 1 ordinary share of £1 in SairaShoes Limited which was a dormant subsidiary of Supreme Imports.

(k)      During the period covered by the Historical Financial Information in Section B of Part IV of thisdocument, by the Historical Financial Information in Section B of Part V of this document and theUnaudited  Interim Financial  Information of  the Group  in Section B of Part VI of  this documenthistorical  financial  information  and  from  1  October  2020  to  the  date  of  this  document  theCompany has made dividend payments to Sandy Chadha and his related parties (namely SandyChadha  and/or  Aditi  Chadha  and  Sandy  Chadha  and/or  Supreme  8  Limited  (a  companycontrolled by Sandy Chadha)). The aggregate dividend payments are as set out below:

AggregatePeriod dividend paid

1 April 2017 to 31 March 2018                                                                                                     Nil1 April 2018 to 31 March 2019                                                                                     £16,288,3401 April 2019 to 31 March 2020                                                                                     £11,000,0001 April 2020 to 26 January 2021                                                                                    £3,000,000

9. Placing and Lock-in Arrangements

A placing agreement dated 26 January 2021 between (1) the Company, (2) the Directors, (3) the SellingShareholders, (4) Berenberg and (5) Grant Thornton, pursuant  to which Berenberg has conditionallyagreed to use its reasonable endeavours to arrange for placees to subscribe for or purchase 50,373,135Placing Shares at the Placing Price, The agreement is conditional, inter alia, upon Admission taking placeon or before 1 February 2021 or such later date as Berenberg, Grant Thornton and the Company mayagree but in any event not later than 26 February 2021. The Company and the Selling Shareholders haveeach agreed to pay Berenberg a commission and the Company has agreed to pay to each of Berenbergand Grant Thornton a corporate finance fee. The Company will pay certain other costs and expenses(including any applicable VAT) of, or incidental to, the Placing including all fees and expenses payable inconnection with Admission, expenses of the registrars, printing and advertising expenses, postage andall other legal, accounting and other professional fees and expenses.

The  agreement  contains  certain  warranties  given  by  the  Company,  the  Directors  and  the SellingShareholders in favour of Berenberg and Grant Thornton as to, amongst other things, the business andoperations of the Group, and the accuracy of information contained in this document, and an indemnityfrom the Company in favour of Berenberg and Grant Thornton in a form customary for an agreement ofthis nature.

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Furthermore  the  agreement  contains  a  12  month  lock-in  period,  during  which the  Primary  SellingShareholder and each of the Directors have agreed (subject to certain exceptions) not to offer, sell orcontract to sell or otherwise dispose of any Shares or interests in shares (each a “Disposal”), withoutthe prior consent of Berenberg and Grant Thornton. In addition, each has also agreed (subject to certainexceptions) that any Disposal in the subsequent 12 month period will be undertaken by Berenberg (orthe Company’s broker from time to time).

Berenberg  and/or Grant Thornton may  terminate  the Placing Agreement  in  specified  circumstancesprior  to Admission,  including,  among  other  things,  in  the  event  of  a material  breach  of  the  PlacingAgreement (or the warranties therein) or of any applicable law or regulation in relation to the Placing orAdmission;  a  material  adverse  change  in  the  Group;  or  a  material  adverse  change  in  national  orinternational  monetary,  political,  financial  or  economic  conditions,  currency  exchange  rates,  foreignexchange controls, stock market trading or commercial banking activities (which would in the judgmentof Berenberg and/or Grant Thornton, acting in good faith, amongst other things, be likely to prejudicethe success of the Placing).

Under the terms of the invitations referred to at paragraph 3(g) above each employee option holder has,amongst other things:

(a)      instructed that that his Employee Shares issued on the exercise of his option be registered in thename of Supreme Nominees Limited; 

(b)      has authorised Supreme Nominees Limited to sell those Employee Shares in the Placing at thePlacing Price and to enter into the Placing arrangements; 

(c)      has granted a power of attorney to Supreme and others to facilitate the placing of the relevantEmployee Shares and

(d)      instructed Supreme Nominees Limited to account to the option holder for the net proceeds of saleafter the deduction of any commissions, fees, costs and expenses and any applicable taxes.

10. Material contracts

The following contracts, not being contracts entered into in the ordinary course of business are eithermaterial and have been entered into by the Company or members of its Group in the period of two yearspreceding  the date of  this document or have been entered  into by  the Company or members of  itsGroup prior to that period and under which a member of the Group has any obligation or entitlementwhich is material at the date of this document:

(a)      The share exchange agreement referred to in paragraph 8(d) above.

(b)      The Relationship Agreement referred to in paragraph 8(e) above.

(c)      The Placing Agreement referred to in paragraph 9 above.

(d)      A nominated adviser agreement, dated 26 January 2021 between Grant Thornton, the Companyand the Directors pursuant to which, and conditional on Admission, Grant Thornton agrees to actas the Company’s nominated adviser in accordance with the AIM Rules for Companies and AIMRules for Nominated Advisers, coordinating communications and acting as primary contact withthe AIM  team,  providing  advice  and guidance  in  relation  to  the AIM Rules  for Companies oncustomary terms. The Company has agreed to pay Grant Thornton an annual fee for its servicesas nominated adviser. The nominated adviser agreement contains certain indemnities given bythe Company to Grant Thornton.

(e)      A  broker  engagement  letter  dated 26  January 2021  between  Berenberg  and  the  Companypursuant to which, following Admission, Berenberg agrees to provide the Company with certainbrokerage services. There is an annual fee which is payable half-yearly in advance commencingon 1 February 2022.

(f)       On  8 March  2018, Supreme Imports  Limited  entered  into  an  invoice  discounting  facility  withHSBC Invoice Finance (“HSBCIF”) which was varied on 19 October 2018 and has been furthervaried with effect from 4 November 2020. The facility (as varied) has a prepayment facility limitof £8,500,000. The agreement  (as varied)  is  for a minimum 18-month  term  from 4 November

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2020 and thereafter until terminated by no less than 3 months’ notice. Supreme Imports Limitedhas agreed not  to give such notice before 31 October 2022. Subject  to certain provisions on,inter alia,  concentration  HSBCIF  will  invoice  discount  invoices  issued  by Supreme ImportsLimited for 85 per cent. of their value subject to such invoices being paid within 60 days. A servicecharge is payable for the facility and interest is payable on amounts advanced.

(g)      On  or  about  1  January  2016,  SI  Jersey  Limited  entered  into  a  licence  agreement  with  J  CBamford Excavators Limited (“JCB”) with Supreme Imports Limited as the guarantor. The licenceagreement  granted  SI  Jersey  Limited  (and Supreme Imports  Limited  as  SI  Jersey  Limited’sapproved sub-licensee) the exclusive right to manufacture and sell JCB branded batteries in theUK, Eire and other specific countries with a commencement date of 1 January 2016. This licencewas novated from SI Jersey Limited to Supreme Imports Limited by a deed of novation dated18 April 2018. The licence was extended on 25 June 2020 and now terminates on 31 December2024.

(h)      On or about 1 September 2016, SI Jersey Limited entered  into a  licence agreement with J CBamford Excavators Limited (“JCB”) with Supreme Imports Limited as the guarantor. The licenceagreement  granted  SI  Jersey  Limited  (who  sub-licensed  it  to Supreme Imports  Limited)  theexclusive right to manufacture and sell JCB branded LED products in the UK, Eire and Malta witha commencement date of 1 September 2016 and terminating on 31 August 2018. This licencewas novated from SI Jersey Limited to Supreme Imports Limited by a deed of novation dated18 April 2018 and varied both by that deed and subsequently on 25 June 2020, inter alia, so thatthe licence now terminates on 31 August 2024.

(i)       On 1 January 2017, Supreme Imports Limited entered into a licence agreement with EnergizerBrands LLC. The licence agreement grants Supreme Imports Limited the non-exclusive right tomanufacture  and  sell  certain  Energizer  and/or  Eveready  branded  light  bulbs  and  to  use  theEnergizer character in named countries in the UK, Europe, Middle East, Africa and Asia Pacific.The licence agreement is for a fixed term of 5 years expiring on 31 December 2024.

(j)       On 28 March 2018 Supreme Imports Limited entered into a lease with Chadha Properties Limited(an Isle of Man company controlled by GS Chadha the father of Sandy Chadha) whereby from5 May  2018 Supreme Imports  leased  premises  at  4  Beacon  Road,  Ashburton  Road  West,Trafford Park Manchester  for a period of 5 years on substantially  identical  terms (save for  thedate of commencement of the lease, the date of the next rent review (which is 3 years from 5 May2018) and that date of expiry of the lease) to that of the previous lease Supreme Imports had forthe same premises. The rent passing was not increased from that paid under Supreme ImportsLimited’s previous lease with Chadha Properties Limited for the same premises. The Directorsbelieve that on any review of the rent passing under this lease (which is due to occur in 2021)the rent is likely to increase.

(k)      A  lease agreement  in  respect of Part of Unit 1 and part of Unit 2 The Royce Trading Estate,Ashburton Road West, Trafford Park, Manchester, Greater Manchester, M17 1RY was enteredinto between Supreme Imports Limited and F H Lee Ltd. The lease was entered into on 14 March2019 for a period of 5 years from 8 August 2018 and expires on 28 July 2023.

(l)       A share purchase agreement dated 24 May 2018 between Paul Dyer and Mark Parvin (1) andSupreme Imports Limited (2) whereby Supreme Imports Limited acquired the entire issued sharecapital of Powerquick Limited for a consideration of £250,000 following the conclusion of a netasset calculation as at completion.

(m)     On 1 December 2018 Provider Distribution Limited entered  into any agreement with BarclaysBank PLC for an overdraft facility for the amount of £485,000. This is secured by an all moniesdebenture in favour of Barclays Bank PLC. The facility is repayable on demand.

(n)      An  agreement  dated  17  June  2019  between  LED  Hut  Fulfilment  Services  Limited  (inadministration) (1) Tracy Pye and David Costley-Wood (2) and Supreme 88 Limited (3) wherebynow Supreme 88 Limited acquired the undertaking and certain of the assets of the business ofLED Hut Fulfilment Services Limited (in administration) for a consideration of £346,624.

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(o)      A share purchase agreement  dated  12  November  2019  between  Mrs  Edith  E.H.  Esser  (1)Mrs Lynda M.J. Esser (2) and Supreme 88 Limited (3) whereby Supreme 88 Limited acquired theshare capital of Holding Esser Affairs BV for a consideration of €1,553,216.

(p)      A share purchase agreement dated 28 February 2020 between Andrew Cockburn and Others (1)and the Company (2) whereby the Company acquired the entire issued share capital of ProviderCash  &  Carry  Limited  (now  called  Provider  Distribution  Limited)  for  a  consideration  of£3,544,564.

(q)      An amendment  and restatement  agreement  dated  26  March  2020  and  made  between  theCompany  (1) Supreme Imports  (2)  and HSBC Bank PLC  (3) which  amended  and  restated  asterling term facilities agreement between the parties dated 21 December 2018. The agreementmade available facilities of up to £26,000,000 in total divided into three facilities namely an A1Facility  of  £12,500,000 to  be  repaid  in  quarterly  instalments  of  £781,250,  an  A2  Facility  of£6,000,000 to be repaid in quarterly instalments of £545,000, and a Facility B of £7,500,000 tobe repaid in full on the termination date being 5 years from the date of the agreement.

(r)       On 8 October 2020, Supreme Imports Limited entered into a facilities letter dated 24 September2020 with HSBC UK Bank PLC (“HSBC”). The facilities may be cancelled at any time and werelast scheduled  for  review  in October 2020. The  facilities granted allow access,  inter alia,  to asmall international business overdraft, bank guarantees (with a limit of £1,200,000), and variousimport  based  loans  (e.g.  letters  of  credit)  (with  an  aggregate  limit  of  £4,500,000).  Interest  ispayable on amounts advanced. The margin varies depending which facility is used from 2.14 percent. to 2.4 per cent as does the reference rate to which the margin is added which might be overBank  of  England  base  rate,  ECB main  refinancing rate, mid  point  of Federal  Reserve targetrange, Swiss National Bank 3 month LIBOR target midpoint or Czech National Bank DiscountRate from time to time.

(s)      A share purchase agreement dated 30 October 2020 between Shaun Gibbons (1) Kevin Smith(2) and Supreme Imports Limited  (3) whereby  the Company acquired  the entire  issued sharecapital of GT Divisions Limited  for a consideration of £1,000,000  to be adjusted based on  thelevel of net assets following the conclusion of a net asset calculation as at completion.

(t)       A  facility  letter dated 23 November 2020 between HSBC Bank PLC (1) and Supreme ImportsLimited (pursuant to which the HSBC Bank PLC made available a facility for foreign exchangecontracts and currency options with a  facility  limited of USD$8,000,000. The  facilities may becancelled at any time and are scheduled for review in January 2021. HSBC Bank PLC may in itsdiscretion  decide  whether  or  not  to  allow  a  utilisation  of  the  Facility  and  may  specify  pre-conditions to such drawing. Interest is payable on amounts advanced.

11. Selling Shareholders

The  following  table contains details of  the Selling Shareholders and  the Shares  to be sold by  thempursuant to the Placing:

Position, office or material relationship

Number with the Group Name Business address of Shares during the past 3 years

41,684,248 Chief Executive Officer

2,193,907

897,965

4 Beacon Road Trafford ParkManchester M17 1AF

Sandy Chadha

Employee and ChiefExecutive Officerrespectively

4 Beacon Road Trafford ParkManchester M17 1AF

Aditi Chadha and SandyChadha as trustees of theChadha Discretionary Trust2020

On behalf of a numberof employees of theGroup holding options

4 Beacon Road Trafford ParkManchester M17 1AF

Supreme Nominees Limited

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12. Taxation

The following summary, which is intended as a general guide only, outlines certain aspects of currentUK tax legislation, and what is understood to be the current practice of HMRC in the United Kingdomregarding  the  ownership  and  disposal  of  ordinary  shares.  This  summary  is  not  a  complete  andexhaustive analysis of all the potential UK tax consequences for holders of Shares. It addresses certainlimited  aspects  of  the  UK  taxation  position  of  UK  resident  and  domiciled  Shareholders  who  arebeneficial owners of their Shares and who hold their Shares as an investment (and not as employmentrelated securities or through an “Individual Saving Account” or “Self Invested Personal Pension”).

Any person who is in any doubt as to his or her tax position or who is subject to taxation in a jurisdictionother  than  the  UK  should  consult  his  or  her  professional  advisers  immediately  as  to  the  taxationconsequences  of  their  purchase,  ownership  and  disposition  of  Shares.  This  summary  is  based  oncurrent  United  Kingdom  tax  legislation.  Shareholders  should  be  aware  that  future  legislative,administrative and judicial changes could affect the taxation consequences described below

(a) Taxation of dividends

There  is  no UK withholding  tax  on  dividends,  including  cases where  dividends  are  paid  to  aShareholder who is not resident (for tax purposes) in the UK.

(i) Individual Shareholders

Shareholders who are individuals receive a tax-free dividend allowance of £2,000 per taxyear and are liable to UK income tax on the amount of any dividends received over this.The rates of income tax on dividend income that exceed the tax free allowance are 7.5 percent. for basic rate taxpayers, 32.5 per cent. for higher rate taxpayers and 38.1 per cent.for additional rate taxpayers.

(ii) Corporate Shareholders

UK resident corporate shareholders and pension funds will not normally be  liable  to UKtaxation on any dividend received.

(b) Taxation of chargeable gains

For the purpose of UK tax on chargeable gains, the acquisition of Shares pursuant to the Placingwill be  regarded as an acquisition of a new holding  in  the share capital of  the Company. TheShares so allotted will, for the purpose of tax on chargeable gains, be treated as acquired on thedate  of  allotment.  The  amount  paid  for  the  Shares  will  usually  constitute  the  base  cost  of  ashareholder’s holding.

(i) Individual Shareholders

If  a UK  resident  individual Shareholder  disposes of  all  or  some of  his  or  her Shares  aliability  to  tax  on  chargeable  gains may,  depending  on  their  circumstances,  arise.  Theshareholder’s annual exemption  (currently £12,300  for  individuals  for 2020/21  tax year)and any capital losses they have may reduce the chargeable gain. UK resident individualsare generally subject to capital gains tax at a current flat rate of 20 per cent. (reduced to10 per cent. where a gain falls within an individual’s unused basic rate income tax band).Trustees  and  personal  representatives  are  generally  subject  to  capital  gains  tax  at20 per cent.

A Shareholder who is not resident in the UK for tax purposes, but who carries on a trade,profession  or  vocation  in  the  UK  through  a  permanent  establishment  (where  theShareholder is a company) or through a branch or agency (where the Shareholder is nota company) and has used, held or acquired the Shares for  the purposes of such trade,profession  or  vocation  or  such  permanent  establishment,  branch  or  agency  (asappropriate)  will  be  subject  to  UK  tax  on  capital  gains  on  the  disposal  of  Shares.  Inaddition, any holders of Shares who are individuals and who dispose of shares while theyare temporarily non-resident may be treated as disposing of them in the tax year in whichthey again become resident in the UK.

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(ii) Corporate Shareholders

Disposals  realised  by  corporate  Shareholders  within  the  charge  to  corporation  tax(currently 19 per cent.) may give rise to a chargeable gain or an allowable loss, subject tothe availability of an exemption (e.g. the substantial shareholding exemption) or relief.

(c) Inheritance tax

The Shares are assets situated in the United Kingdom for the purposes of UK inheritance tax.A gift  of  Shares  by,  or  on  the  death  of,  an  individual  Shareholder  may  (subject  to  certainexemptions and reliefs) give  rise  to a  liability  to UK  inheritance  tax even  if  the Shareholder  isneither domiciled nor deemed to be domiciled in the United Kingdom.

(d) AIM

Companies whose shares trade on AIM are deemed unlisted for the purposes of certain areas ofUK  taxation.  Following  Admission,  Shares  held  by  individuals  for  at  least  two  years  fromAdmission may qualify for more generous exemptions from inheritance tax on death or in relationto lifetime transfers of those Shares. Shareholders should consult their own professional adviserson whether  an  investment  in  an AIM  security  is  suitable  for  them,  or whether  the  tax  benefitreferred to above maybe available to them.

(e) Stamp duty and stamp duty reserve tax

No UK stamp duty will be payable on the issue by the Company of Shares and no stamp duty orstamp duty reserve tax is payable on transactions in shares traded on AIM where the shares arenot also listed on a recognised stock market.

Any person who is in any doubt as to his or her tax position or who may be subject to taxin any other jurisdiction should consult his or her professional adviser.

13. Investments

Except as set out in this document there have been no investments made by any member of the Groupor to be made in the future in respect of which firm commitments have been made.

14. Working capital

In the opinion of the Directors, having made due and careful enquiry and taking into account the netproceeds of the Placing, the working capital available to the Company and the Group will be sufficientfor its present requirements, that is for at least the next twelve months from the date of Admission.

15. Litigation

Save as disclosed below, no member of the Group is or has been involved in any governmental, legalor arbitration proceedings during the 12 months preceding the date of this document which may haveor have had in the recent past a significant effect on the financial position or profitability of the Groupand, so far as the Company is aware, there are no such proceedings pending or threatened.

Philips Lighting BV (“Philips”)

On or about 30 June 2016, Supreme Imports Limited was approached by Philips and invited to join itsEnabLED  Licensing  Program  which  would,  inter  alia,  have  entailed  a  royalty  payment  to  Philips.Through a series of correspondence between Supreme Imports Limited and Philips, it was inferred thatthe Group’s Trillion LED range infringed some of Philips’ patents. During this time, Philips approachedSupreme Imports  Limited’s manufacturer  in China but  it  did  not  particularise any problems with  theTrillion LED range. Philips has not taken any steps to press any patent infringement since June 2016and has not provided the Group with sufficient particulars of any alleged breach to enable the Group toassess whether any breach actually occurred and, if so, what, if any, potential for damages flow fromsuch breach. The Group ceased to manufacture the Trillion range in 2016 although it continues to sellits stock which it intends to continue to do until the stock is exhausted or otherwise not saleable.

The Group  is aware that JCB and Energizer have had  letters  from Philips  in relation to LED lightingmanufactured by Supreme under licence inferring that this infringed some of Philips’ patents. The terms

178

of Supreme’s arrangements with Energizer and JCB are such that Supreme are obliged to indemnifyEnergizer and JCB against any such claims. In both cases, specific details of any actual breach has notbeen particularised and therefore whether in fact there is a breach and if so what, if any, potential fordamages flow from such breach is impossible for the Group to assess.

Health and Safety Executive (“HSE”)

On 22 October 2020 an agency worker contracted to VN Labs Limited sustained a serious injury to hishand. The full extent of the injuries are yet to be determined. The Company immediately notified theHealth and Safety Executive  in England who are  investigating. The Company continues  to make allresources available to the HSE and will co-operate until the matter is concluded. Enforcement methodsavailable  to  the  HSE  inspectors  include  providing  written  information  regarding  breaches  of  law;requiring  improvements  in  the way  risks are managed;  stopping certain activities where  they createserious risks; and recommending and bringing, prosecutions where there has been a serious breach oflaw.  The matter  has  been  notified  to  VN  Labs’  insurers.  There  is  not  expected  to  be  any materialadverse financial impact on the Company.

16. Takeover Bids, Squeeze-out Rules, Sell-out Rules, Public Takeover Bids and Notification ofMajor Interests in Shares

(a) Takeover Bids

The Takeover Code applies to the Company. Under Rule 9 of the Takeover Code, if an acquisitionof Shares and/or interests therein were to increase the aggregate interest of the acquirer and itsconcert parties in shares carrying 30 per cent. or more of the voting rights in the Company, theacquirer and, depending on the circumstances, its concert parties, would be required (except withthe consent of the Takeover Panel) to make a cash offer for the Shares not already held by themat a price not less than the highest price paid for the Shares by the acquirer or its concert partiesduring the previous 12 months.

Under Rule 9 of the Takeover Code, this requirement would also be triggered by any acquisitionof  Shares  and/or  interest  therein  by  a  person  (together with  its  concert  parties)  interested  inshares carrying between 30 and 50 per cent. of the voting rights in the Company if the effect ofsuch acquisition were to increase those persons’ percentage interest in the total voting rights ofthe Company.

“Interests in shares” is defined broadly in the Takeover Code. A person who has long economicexposure, whether absolute or conditional, to changes in the price of shares will be treated asinterested in those shares. A person who only has a short position in shares will not be treatedas interested in those shares.

“Voting rights” for these purposes means all the voting rights attributable to the share capital ofa company which are currently exercisable at a general meeting.

Persons acting in concert (and concert parties) comprise persons who, pursuant to an agreementor understanding (whether  formal or  informal), co-operate  to obtain or consolidate control of acompany or to frustrate the successful outcome of an offer for a company. Certain categories ofpeople are deemed under the Takeover Code to be acting in concert with each other unless thecontrary is established.

(b) Squeeze-out Rules

Under the Companies Act, if an offeror were to acquire 90 per cent. of the Shares to which anoffer  relates,  within  four  months  of  making  its  offer  it  could  then  compulsorily  acquire  theremaining 10 per cent.  It would do so by sending a notice  to outstanding Shareholders  tellingthem that it will compulsorily acquire their shares and then, six weeks later, it would execute atransfer  of  the  outstanding  shares  in  favour  of  the  offeror  and  pay  the  consideration  to  theCompany, which would hold the consideration in trust for outstanding Shareholders.

The consideration offered to the Shareholders whose shares are compulsorily acquired under theCompanies Act must, in general, be the same as the consideration that was available under thetakeover offer unless the Shareholders can show that the offer value is unfair.

179

(c) Sell-out Rules

The  Companies  Act  also  gives  minority  Shareholders  a  right  to  be  bought  out  in  certaincircumstances by an offeror who had made a takeover offer. If a takeover offer related to all theShares and at any time before the end of the period within which the offer could be accepted, theofferor held or had agreed  to acquire not  less  than 90 per cent. of  the Shares, any holder ofShares to which the offer relates who has not accepted the offer can by a written communicationto the offeror require it to acquire those shares. The offeror is required to give any Shareholdernotice of his right to be bought out within one month of that right arising.

The offeror may impose a time limit on the rights of minority Shareholders to be bought out, butthat  period  cannot  end  less  than  three  months  after  the  end  of  the  acceptance  period.  If  aShareholder exercises its rights, the offeror is bound to acquire those shares on the terms of theoffer or on such other terms as may be agreed.

(d) Public Takeover Bids

There  have  been  no  public  takeover  bids  by  third  parties  in  respect  of  the Company’s sharecapital since incorporation.

(e) Notification of major interests in Shares

Chapter 5 of  the Disclosure and Transparency Rules published by  the FCA makes provisionsregarding notification of certain shareholdings and holdings of financial instruments.

Where a person holds voting rights in the Company as a Shareholder through direct or indirectholdings of financial instruments, then that person has an obligation to make a notification to theFCA and the Company of the percentage of voting rights held where that percentage reaches,exceeds or falls below three per cent. or any whole percentage point above three per cent.

The requirement to notify also applies where a person is an indirect Shareholder and can acquire,dispose of or exercise voting rights in certain cases.

Shareholders are encouraged to consider their notification and disclosure obligations carefully asa  failure  to make  any  required  notification  to  the Company may  result  in  disenfranchisementpursuant to the Articles (see paragraph 4(a) of this Part IX above).

17. General

(a)      Save as disclosed in this document, there has been no significant change in the financial positionor financial performance of  the Group since 30 September 2020, being  the date  to which  thelatest  unaudited  interim  financial  information set out  in Part VI of  this document  in  relation  toSupreme was prepared.

(b)      BDO LLP has given and not withdrawn its consent to the inclusion of its reports in Section A ofPart IV, Section A of Part V and Section A of Part VI of this document in the form and context inwhich they appear.

(c)      Berenberg has given and has not withdrawn its written consent to the inclusion in this documentof its name in the form and context in which it appears.

(d)      Grant  Thornton  has  given  and  has  not  withdrawn  its  written  consent  to  the  inclusion  in  thisdocument of its name in the form and context in which it appears.

(e)      The gross proceeds of the Placing receivable by the Company are expected to be £7.5 million.The total costs and expenses of and  incidental  to Admission and  the Placing, payable by  theCompany,  (including  registration  and  London  Stock  Exchange  fees,  printing,  advertising  anddistribution costs, legal, accounting, corporate finance and public relations fees and expenses)are estimated to amount to approximately £1.9 million (net of recoverable VAT).

180

(f)       The Group relies on intellectual property laws to protect certain aspects of its business and, inparticular, its copyright in e-liquids originated by it. In addition the Group has a number of domainnames  for use as websites and/or email  addresses. The Group has  the  following  trademarkswhich it uses in the ordinary course of its business:

Registered Registration Effective RenewalTrademark no Mark Class(es) Date Date Date

UK00003395567                  88CBD                      5/34/35           23/08/2019          29/04/2019    29/04/2029

UK00003071511                   88vape                      34                   05/12/2014          08/09/2014    08/09/2024

EU017579632                      88vape                      34                   20/04/2018          11/12/2017    11/12/2027

EU018009551                      Battle                         29, 30             04/05/2019          14/01/2019    14/01/2029

EU013658968                      Battle Oats                43, 29, 30       04/05/2015          20/01/2015    20/01/2025

013359344(Israel)                DYNABAR                 5, 30               10/03/2015

013359377(Israel)                DYNAGO                  5, 30               10/03/2015

013359211(Israel)                 DYNAPRO                5, 30               10/03/2015

UK00003017166                  Go Nutrition               5/29/30/32      22/11/2013           07/08/2013    07/08/2023

UK00002644922                  KIK                            34                   08/03/2013          06/12/2012    06/12/2022

TMZC22894446CSGG

(China)                              KIK                                                   27/11/2017

UK00003516625                  Little Millions             5                     06/11/2020           28/07/2020    28/07/2030

UK00003536567                  Millions                      5                     Not yet granted    23/09/2020

UK00003536568                  Millions & Millions     5                     Not yet granted    23/09/2020

UK00003059669                  Protein Dynamix        5                     03/10/2014          12/06/2014    12/06/2024

1706940(Canada)                Protein Dynamix        5                     14/09/2016

2014/33989(South Africa)     Protein Dynamix        5                     11/12/2014

UK00003017155                  Solo                           5                     08/11/2013           070/8/2013    07/08/2023

UK00003273339                  Total CBD                  5, 34               27/11/2017           27/11/2017    27/11/2027

UK00003232779                  Trance Vape              34                   11/08/2017           22/05/2017    22/05/2027

UK00003022722                  Trillion                        11                   13/12/2013          19/09/2013    19/09/2023

UK00003024443                  Trillion                        9                     27/12/2013          02/10/2013    02/10/2023

Save as disclosed  in  this document,  the Company  is not dependent on any patents,  licences,industrial  or  commercial  or  financial  contracts  or  new manufacturing processes which have amaterial effect on the Company’s business or profitability.

(g)      There are no arrangements under which future dividends are waived or agreed to be waived.

(h)      The financial information set out in this document does not constitute statutory accounts withinthe  meaning  of  section  434  of  the  Companies Act.  Statutory  accounts  for Supreme ImportsLimited for  the  three years ended 31 March 2018, 2019 and 2020 have been delivered to  theRegistrar of Companies in England and Wales. The auditors to Supreme Imports Limited for thethree years ended 31 March 2018, 2019 and 2020 were BDO LLP a member firm of the Instituteof Chartered Accountants in England and Wales. BDO LLP have made reports in the statutoryaccounts  of Supreme Imports  Limited  for  each  period.  Such  reports  are  unqualified  andcontained no statement under section 498(2) or 498(3) of the Companies Act. Statutory accountsfor the Company for the two years ended 30 June 2017 and 2018, the nine month period ended31 March  2019  and  year  ended  31  March  2020  have  been  delivered  to  the  Registrar  ofCompanies  in  England  and Wales. The  auditors  to  the Company  for  the  nine months  ended31 March 2019 and the year ended 31 March 2020 were BDO LLP a member firm of the Instituteof Chartered Accountants in England and Wales. BDO LLP have made reports in the statutoryaccounts  of  the  Company  for  each  period.  Such  reports  are  unqualified  and  contained  nostatement under section 498(2) or 498(3) of the Companies Act. The accounts for the two yearsended 30 June 2017 and 2018 were unaudited.

(i)       The Shares will only be traded on AIM.

(j)       The  Company’s  registrar  and  paying  agent  for  the  payment  of  dividends  is  Equiniti,  AspectHouse, Spencer Road, Lancing, West Sussex BN99 6DA.

(k)      Save  as  disclosed  in  this  document  there  have  been  no  interruptions  in  the  business  of  theGroup, which may have or have had a significant effect on the financial position of the Group orwhich are likely to have a material effect on the prospects of the Group for the next 12 months.

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(l)       Save as  disclosed  in  this  document  the Directors  are  not  aware  of  any  trends,  uncertainties,demands,  commitments  or  events  that  are  reasonably  likely  to  have  a material  effect  on  theGroup’s prospects for the current financial year.

(m)     Since  the date of  its  incorporation on 13 June 2006 up  to  the acquisition of  the  issued sharecapital of SI Holdings on 8 March 2018, the Company had not commenced operations and it hadno  material  assets  or  liabilities,  and  therefore  only  dormant  company  accounts  have  beenprepared for periods ended on or before 8 March 2018.

(n)      The following are the premises leased or licensed by the Group

Address Tenure Nature of Premises Expiry Date

     Leasehold                 4 May 2023

     Leasehold         Warehousing                         28 July 2023

     Leasehold         Warehousing                         15 November 2025

     Leasehold                22 February 2022

     Leasehold                10 March 2022

                                                   Leasehold         Storage and Distribution       30 June 2022

(o)      Except for fees payable to the professional advisers whose names are set out  in Part I of thisdocument, payments to trade suppliers, and save for fees paid to DWF Law LLP in respect oflegal advice and fees paid to PricewaterhouseCoopers in respect of tax advice, no person hasreceived any  fees, securities  in  the Company or other benefit  to a value of £10,000 or more,whether directly or indirectly, from the Company within the 12 months preceding the applicationfor Admission, or has entered  into any contractual arrangement  to receive from the Company,directly or indirectly, any such fees, securities or other benefit on or after Admission.

(p)      Save as disclosed in this document, the Directors are unaware of any exceptional factors whichhave influenced the Company’s activities.

(q)      Where  information  has  been  sourced  from  a  third  party,  the  Company  confirms  that  theinformation  has  been  accurately  reproduced and  the  source  of  the  information  has  beenidentified, and that as far as it is aware and is able to ascertain from the information published bythose  third parties,  no  facts have been omitted which would  render  the  information producedinaccurate or misleading.

(r)       Save as disclosed in this document, the Directors are unaware of any environmental issue thatmay affect the Group’s utilisation of its tangible fixed assets and the Directors have not identifiedany events that have occurred since the end of the last financial year and which are consideredlikely to have a material effect on the Company’s prospects for the current financial year.

(s)      In  the  financial  year  ended  31  March  2020  the  Group  employed  on  average 83 temporaryemployees.

(t)       Save as disclosed in this document, there have been no significant recent trends in production,sales and inventory and costs and selling prices of the Group since 31 March 2020.

Main office, warehouseand vaping clean room

4 Beacon Road, AshburtonRoad West, Trafford ParkManchester, M17 1AF

Part of Unit 1 and part ofUnit 2 The Royce TradingEstate, Ashburton RoadWest, Trafford Park, GreaterManchester M17 1RY

Units 3 & 4 SevernsideTrading Estate, TraffordPark, M17 1WA

Warehousing andancillary offices

Unit 1 Hollinshead Mill, StJames Road, Blackburn,BB1 8ET

Warehousing andancillary offices

Units A & B HollinsheadMill, St James Road,Blackburn, BB1 8ET

182

(u)      The accounting reference date of the Company is 31 March.

18. Documents available for inspection

Copies of this document will be available free of charge to the public during normal business hours onany day (except Saturdays, Sundays and public holidays) at the registered office of the Company forone month from the date of this document. This document is also available on the Company’s website,www.supreme.co.uk.

Dated: 27January 2021

183

sterling 174466

4 Beacon Rd, Trafford Park,Stretford, Manchester M17 1AF

www.supreme.co.uk

Admission DocumentJanuary 2021